Ah, the age old question as to which is better to go? Haha, I was faced with this same dilemma a few years ago and I decided to go with Nikon. Why you might ask, mainly because Nikon cameras fit better in my hand. Even the smaller cameras such as the D40 still felt better in my hand than the Rebel series. And I feel like the entry level (D40, D60) and pro-sumer level (D80, D90) had better built and finish over the Rebel equivalents.
Both systems, Nikon and Canon are excellent so you can not go wrong either way. Both systems have cheap and expensive lenses, both systems have cheap and expensive bodies. But as you can probably tell the Canon entry level offerings seems to be cheaper than the Nikon equivalents. For example as a Nikon fanboy myself, I think that the 450D/500D are better cameras than the D40 since they offer more features at that price point.
Another point to consider you might want to pick one over the other depending what your friends have since you might be able to share lenses with your friends and that will definitely help cut down on your cost.
Either brand you pick, the limiting factor won't be the camera but the guy behind the camera. :)
Personally right now, I have a D80, I picked it up for $425 USD, that was practically brand new with only 150 shutter clicks. So I think at $640 might be a little bit expensive. Especially considering you can buy a refurbished D90 for $800 with US warranty.
Good lenses, right now I have a 18-200mm VR, that is my general walk around lens that I bring everywhere. I also have my 18-70mm that is tack sharp so if I an shooting cars, I will generally use that. I also have a 35mm f/1.8 for indoors such as museums , and finally I have a 70-300mm Sigma for super-zoom for going to zoos and air shows.
So there are lots of options out there, I think a great lens is the D90 kit lens, 18-105mm VR which goes for about $250 used. I think that would pair perfectly with a D80 body.
Feel free to email me if you have any additional questions.