Anoter vote for the Canon D-Reb.
If your budget is a grand, give serious consideration to the T1i kit. An extra c-note spent on the camera body will get you more resolution (15Mp vs 12), the DIGIC 4 processor, video capability (see Oleg's post above), faster startup time, revised autofocus system with a cross-type center sensor, continuous shooting up to the capacity of the memory card, a larger display, and far superior noise control (I've seen test shots at 6400 and 12800 ISO that beat the pants off my original D-Reb at 400!).
If you already have Canon-branded EF-series SLR lenses, they should work with the Reb. Third-party lenses built prior to the digital revolution may require a firmware upgrade to work properly. The 18-55 kit lens will be plenty for getting used to the camera and exploring the world of digital. You can delve into better glass as your skills and wallet allow. Harold is right, an L-series lens has a stunning price, but also the stunning performance to match.
My Google Fu reveals the T1i prices as:
Walmart
$750 Body only
$830 Kit with 18-55 lens
$850 Kit with lens, bag, and extra SDHC card
B&H
$707 Body only (with mail in rebate)
$795 Kit with 18-55 lens (plus shipping)
Sam's Club
$819 Kit with 18-55 lens
There's always Craigslist. Entry-level DSLR's tend to be a pretty hot commodity - people stepping up to a pro unit, some genius who thought they were going to be a hotshot photographer, or maybe just someone who needs to eat more than they need the camera.
Brad