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Digital Rebel XT(+i depending on how much money you want to spend).
For the same money spent, daylight picture quality is roughly the same between Nikon and Canon, but Canons' picture quality is slightly better under low light conditions (which turns out to be a *massive* advantage for indoor pictures)
Using a flash inevitably flattens the image - You know how these (built-in) flash pictures turn out: A brightly lit subject in front of a black hole... - and the Canon can take a decent enough picture in light conditions that would require a flash on the Nikon.
With just the normal lights on, the Canon will take fantastic pictures of family get-togethers (christmas, new years) without using a flash.
At ISO 1600 - 1/30 there might be the odd motion blur when people make fast gestures, but you capture a much more lively and inviting scene than you would with any flash.
Keep in mind, though, that even these small DSLRs are big. You do not put them in your trouser pocket and as a result, you don't lug them around everywhere. You have to want to get into this as a hobby, otherwise you're better off with the best point-and-shoot you can buy.
(I've got a degree in photography but I ended up doing something completely different, in case you're weighing opinions ;-)
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