Also, the 40D and either lens just about fills the budget, so I was thinking of buying the 50mm f/1.8, which runs for about $80. Is that wide enough on a cropped frame camera for indoor portraits, say at a party?
Others can chime in but I give it a No, IMO at a party you might want more than just peoples faces. People playing beer games, jumping around, dancing, clothing. I think you'll need wider. Ask other people but I wonder if a cheaper kit lens, like a 18-55 might work here better, it you just want shots of people, not supper high quality pictures your going to frame. That could be reasonably cheap.