If you're looking at a Canon, the 1100D has just been brought in to replace the 1000D, and the 600D has been brought in as a slight step up from the 550D.
Whichever way you go, buy a camera body you'll be willing to keep for a while, then upgrade lenses as and when your budget/needs require them. Your first new lens should be a "Nifty Fifty," which is a cheap (but excellent value) prime (i.e. non-zooming) lens.
Once you make your purchase, use the camera as often as possible, and experiment with different settings to see how they affect your shots.
As for editing programs, Photoshop Elements should be fine and it's currently up to version 9. There are plenty of free programs too, but I couldn't tell you what's good to use.
Oh, and some essentials you should account for in your budget:
- a decent, sturdy tripod (don't get anything too cheap or it will almost be pointless);
- UV filters for ALL your lenses;
- a spare battery;
- extra memory cards; and
- a decent bag that will fit everything in with some room for new stuff later.