Well, a K20D body can be had brand new for under $700 now and you could pick up a used kit lens (very nice, complete with proper focus ring, non-rotating front element, metal mount, and hood) for dirt cheap, that'd get you started.

IMHO the K20D bests the 40D pretty easily in most categories, the only exceptions being continuous shooting speed and probably autofocus speed (but the K20D is no slouch, either.) Don't forget about image stabilization, too! And the weather sealing... hyper-program mode... etc, etc...
FWIW I've dealt with Pentax service a couple times. I sent in my K20D for some focus tweaking and mentioned some uneven sensor noise at very high ISOs. There was some screwup where the wrong name (but right address) got attached and when I got the camera back, there wasn't a record of what they did. I called to ask and they apologized profusely and asked me to send it back and I suspect they did exactly the same work to it again, but at least I got paperwork saying so.

(New circuit board and focus tweaked - focus was perfect afterwards, no need to tweak it in Custom Menu as I had before.) It took 2-3 weeks ("waiting for parts") but it was OK. Since then, I sent in my 16-50mm F2.8 because once in a while the focus would be a little slow the first time I'd use it in a session then it'd speed up - like it was a tad sticky or something. They immediately shipped me a brand new lens.
As for sticking with Canon or not, IMHO there's no reason to if you're not happy with the service you're getting. Vote with your feet and if you've got the time, send them a letter and explain that your poor experiences have meant that you're jumped ship to N, P, O, or S. You've certainly had more than your fair share of headaches from them from what I've read of yours over the past few years. Besides, I don't really buy the idea that it's all that painful to switch systems, especially if you only have a small lens collection. Lots of people here have started with an entry-level DSLR and kit lens(es) then moved on to higher-line DSLRs and nicer lenses, selling or not using their older, cheaper gear. Good lenses generally retain their value, too, so you're not likely to get hosed too bad even if you do have a few good ones.
Good luck whichever way you end up going. Your luck can only get better.
