I shoot dance and theater events, primarily with a 1DMkIII, 5DMkII and 5D. I have a 40D, which I have no plans to get rid of as a backup or casual camera. Usually use it as a remote triggered (PW's) wide-angle.
That said I did get a 7D, primarily as a back-up and when I just want one body with a high fps and video. Kind of a baby combination of the 1DMkIII & 5DMkII. I am not disappointed, with a little long reach. Is the IQ as good as the pro/prosumer models, no, but with L lenses, will be fine.
While I have only had it for a few days, the AF is a real improvement, quiet shutter, good IQ, very good high ISO and choices with the HD video. While I truly didn't need this camera, I love it!
Especially being able to have two seperate AF points you determine, one for vertical and one for horizontal that the camera changes based on orientation. I WISH my 1DMkIII & 5DMkII did this. It will make doing single and group shots so much quicker.
The 40D is still a great camera and I will continue to use it as a remote. But if I had to have only one body, choosing between the 40D and 7D, no question the 7D.
I must confess however to being a camera "packrat". I still have a Minolta SRT101 35mm (manual everything

)with complete lens array, and a Canonet 28, 35mm rangefinder with working external flash. Both dinosaurs, but still will take great pictures.