Yup, the XTi is the successor/replacement for the XT. If I were in the same scenario, I'd tend to get the XTi and get some quality glass later on rather than picking up an XT for a discount and buying the glass now.

The bodies, as mentioned earlier in the thread, tend to depreciate over time, but glass holds its value.

Only reason I picked up my DRebel instead of the XT when I purchased is because the XT (and the XTi) have much smaller bodies than the original Rebel. The XT just didn't feel substantial enough in my hands. Matter of fact, I've since added a battery grip to the Rebel, so it's even bigger now. Tends to make it a bit bulky and inconvenient at times, though.