I too own the 350D + battery grip ( which i dont always use) but gives the camera "presence" and is a joy to use for vertical shots. I went into Jessops and took a compact flash card in and took identical pics on auto on each and then went home to compare them on the computer . I did not see any difference. Picture qualitywise they are virtually identical . The 20d feels more solidly built but the plastic finish on the 350d disguises a sturdy unit. I am 6 feet tall and use (surgical) size 8 gloves yet dont find the smaller size a problem.
I have taken over 3000 pics with it since buying it in April this year. I now wish for: A better lens: EFS 17- 40mm, Canon flash : 550ex then the 440 so i can use one as a master the other as a slave ( wireless). I also wish for elegant models.... (if wishes were horses..) Im sure you get the drift though.
The kit lens is passable ( really) but it is cheap enough to buy to get used to the camera. You will find loads of .."Oh the 20d is better , the Nikons are better " devotees. The digic processor in the 20d and 350d are identical and the cmos sensors are not too disimilar. The menu system and options are also quite comprehensive ( and similar)
Good luck in your purchase.. whatever you buy will be a decent solid camera and you will soon need the latest "toy "a few years down the line.
I (still ) do not regret buying the 350 over the 20D . I have spent the difference on the battery grip, a camera bag, extra battery, 2 1G sandisc ultra III compact flash cards, photopaper and ink for my epson r300 photo printer ( they drink ink!!) and a little book on Adobe Photoshop elements3 .PSE4 is now out.
I recently returned from Disneyland with the Kids and of the 250-300 pics we took, I could print 85-90% without any editing and am satisfied.
Niether camera will dissapoint you , but dont forget, Like with buying a car, the spending doesnt stop there. ( just bought a car and feeling skint here!!)
Cheers
And no...I do not work for Canon!