As you will have read, Gordon has nicely summed up the differences between the 350D and 400D on the 400D review verdict page's paragraph entitled Upgrading from the EOS 350D / Digital Rebel XT
I guess it's all down to budget. That's stating the obvious really but if it were me and I could afford to buy a 350D together with a better lens than the kit offering but couldn't do so if I bought a 400D then I would opt for the 350D. That isn't to say that the kit lens is rubbish, far from it, but you can do better.
If you can choose a zoom lens which will satisfy most, if not all, of your needs then the lack of an "anti-dust" feature on the 350D isn't a big issue. On the other hand, if you expect to change lenses often then maybe the 400D is more attractive.