I've shot some decent photos with a cheap Nikon D40x DSLR. The key is the lense and knowing what manual settings to use. Most importantly is having (or knowing) how to compose your photos so they are interesting to look at. (I am still working on this part)
My goal is to buy the D7000 this year with a nice piece of glass. A lofty 4k goal, but hey, we all have to dream right?