I was faced with the same decision late last year when I decided to stop taking photos as a money making sideline. Sold up my 1dMk2N and bought a 40d rather than a 5d.
Bought the 4d because I feel that it is a better all rounder. Whilst you can shoot action with the 5d, the 3fps framerate makes it a bit of a chore sometimes. Image quality wise between the two you'd need to be very anal indeed to see any difference in print unless you start blowing the prints up to ridiculous sizes. And for reference I've had 8mb 20d and 1d images blown up to 16x24 and they've been as sharp as a tack even up close. Technique and lenses make more of a difference when the difference in resolution is so marginal.
My original plan was to buy the 40d as a hold over till Canon released a 5d replacement in the hope that it would have the larger sensor and a higher frame rate, but I can honestly say that I won't be bothering now. The 40d is more than good enough.
Don't fall into the trap of thinking you need the higher priced camera to take good photos. Buy the 40d and stick the extra money you were going to blow on a body in an L series lens. You'll see more improvement from the lens than the larger sensor and a few extra pixels.
Just for laughs here's some shots taken with different bodies. Admittedly they are only small low res shots, but even at full res on my machine here at home there isn't $1500 or in the case of the 1dMk3 $5-6k difference in quality to my eyes. 5d is no different.
40d + 300 prime
1dMk2N + 70-200 2.8 IS
1dMk3 + 300 prime
