Originally Posted by Renault78law
A lot of "interesting" information here.
I have a D40, and I'm somewhat of a camera enthusiast. I've read books about exposure, composition, and follow the Nikon message boards. I bought the D40 for the very same purpose, to take photos of my child to be.
Since most of the photos you plan to take will be indoors, I highly recommend a external flash. This will increase your image quality much more than any new lens. The most basic external flash from Nikon is called the SB 400. It is an exceptional value, small, light and has bounce capability. It is completely idiot proof and will give you great captures right out of the box. The next step up is the SB 600, which is much larger and heavier, but more versatile. For instance, you can bounce the flash when you're shooting in portrait and you can also bounce behind you - two features that the SB 400 does not have. (GQGeek, FYI the SB 800 has been discontinued, the new top of the line flash is the SB 900).
With respect to the other posters, an ultra wide aperature lens is not going to be much help. First, the OP shots in full auto. Second, in low light, he'll have no choice but to shoot wide open, which will give him little depth of field. Literally, you'll get shots where your baby's ear is in focus, but the face is not.
Finally, if you do get a new lens, make sure it is compatable with the D40. Nikon lenses will have AF-S in the title somewhere. Otherwise, you may end up with a lens that will not autofocus on the D40 body. I would also recommend a lens that has VR (vibration reduction).
I'm on the Olympus system so I don't know how the Nikon flashes breakdown, but initially I got the FL-36 flash, which had most of the same features as its big brother but less range and a longer recycle time. The recycle time was slow, which was annoying because it made me miss shots. I'm sure the Nikon flashes are the same. My recommendation for flashes is always to get the big one. It's more expensive and a little bit bigger, but you won't find yourself cursing when you miss a shot while you're waiting for it to charge up again.