The Digital Rebel T1i is certainly the most fully featured "Digital Rebel" to date, and comes very close to equaling the performance of the EOS 50D in many respects. It has the same sized sensor and shares many firmware features such as Peripheral Illumination Control, Highlight Tone Priority, High ISO noise reduction, Auto Illumination Optimization and the usual array of exposure, metering and Picture Style options. The T1i is the first DSLR in the Rebel series which offers an ISO setting over 1600 and Canon went all the way and added not only ISO 3200, but 6400 and 12800 as well, again equaling the specifications of the EOS 50D. Canon even gave the T1i the new high resolution 3" LCD screen found on the 50D. The Digital Rebel T1i actually goes one step further than the EOS 50D in one respect and incorporates many of the video recording features only found elsewhere in the Canon lineup on the EOS 5D MkII.
Of course all these added features wouldn't be so attractive if the image quality of previous models hadn't been maintained, but it has. Despite the increased pixel count (and consequently smaller pixels), noise is well controlled (at least up to ISO 3200) and image quality is very similar to that of the EOS 50D.
For anyone who wants to shoot HD video, the T1i at a current price of around $800 (including the 18-55 IS lens) is a real bargain, especially when the only other alternative in the Canon lineup is the $2700 Canon EOS 5D MkII. Of course the 5D MkII is a full frame camera and has more video controls and a higher 1080p frame rate, but then for almost $2000 more, it should have!
Overall I think the Digital Rebel T1i is one of the best bargains in Canon's (or anyone else's) DSLR lineup. You get a high resolution sensor, ISO capabilities up to 12,800, HD video and most of the "bells and whistles" that the average photographer will ever need.
The best lens deal is to buy the Digital Rebel T1i kit which comes with the EF-S 18-55/3.5-5.6 IS lens. This isn't a bad lens at all and the Image Stabilization is very effective. It makes a good wide to short telephoto zoom and it's small, light and inexpensive. Right now the price of the kit is running at about $25 more than the body alsone, so it's pretty much a deal you can't beat! If you want to stay with the small and light theme, then the EF-S 55-250/3.5-5.6 IS lens is the obvious choice. With those two lenses you cover the range from 18mm to 250 mm with Image Stabilization.
If you're looking for more "upscale" (and expensive) lenses, take a look at the EOS LENSES page which covers most of the better "affordable" lens offerings from Canon or one of the following "specialist" Canon EOS lens pages:
I think a good lens set for the Digital Rebel T1i would be the EF-S 10-22/3.5-4.5 USM for it's wideangle coverage, the EF 24-105/4L IS USM for mid range work and the Canon EF 70-300/4-5.6 IS USM for a good, handholdable, telephoto zoom. I have and use all three lenses and I'm happy with them. For a "single lens" general purpose shooting solution, I'd go for the Canon EF-S 17-85/4-5.6 IS USM, or, if you only intend ever to buy one lens and leave it on the camera all the time, the EF-S 18-200/3.5-5.6IS might be worth consideration.
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Note that the T1i doesn't come with a memory card, so I'd recommend ordering one with the camera. If you don't have an SDHC card reader, you'll need one of those too.