My first camera was a Canon Digital Rebel XT or EOS 350 with a Sigma 17-35mm F2.8-4 EX DG Aspherical HSM wide angle lens and a Canon EF 70-200mm f/4.0 L USM Lens. While the Sigma takes excellent photos with very little vignetting, I notice a substantial difference with my L series lens, which provides greater detail.
Eventually, I began looking for prime lenses that could compare to the L series lenses without costing over $1000. I discovered three primes that work amazingly well: the Sigma 30mm 1.4, the Canon 50mm 1.4 USM, and the Canon 85mm 1.8. The fast apertures allow for great photos in low light and also handheld at night. During the summer of 2008, I purchased a Sigma 10-20 wide-angle lens for my trip to Thailand. In the fall, I found a low-cost Canon 28-105 macro (made in Japan) lens for walking around. I've since added a Tamron 28-75 f2.8 zoom as my main walk around lens, and gave the 28-105 to my daughter for her birthday.
This past Spring I bought a Canon EOS 50D, 15 mp. While I get more detail with the better lenses (the primes), sometimes it only seems a nudge better than the Rebel XT.
I use PhotoShop Lightroom to catalogue and develop raw images.
Update: I recently purchased a Canon 15-85mm as a walk around lens; sold the Tamron 28-75mm, the Sigma 17-35, and my wide-angle Sigma 10-20mm, which I used a lot. I replaced it with the Sigma 8-16mm, and have some sample photos in the gallery. Also added a Canon 100mm f/2.8 macro. I still own and use the prime lenses for special purposes like concerts or low light.