Is a Nikon D90 a worthy replacement for my elderly Nikon D40?

I have noticed the price of the Nikon D90 has started to fall quite a lot. I only need the Body as I have lenses.
Cheers

Sure but consider D7000.

Yes it is. I did the exact same upgrade. You'll feel at home with a D90 immediately, and it gives you basically all the things that you may have missed on the D40, such as some more autofocus fields, two dials instead of one, a AF motor, ISO display in the viewfinder, bracketing and much more.

Be aware though that you won't really get better photos from a D90. The upgrade will be mostly in ergonomics and convenience of use. But there it's a huge one, and i'm not looking back (albeit i still love my old, meanwhile defective D40 for its simple elegance).So… Be aware that'll essentially be a luxury purchase. If you want to take photos that you couldn't take before, get a new, fine lens instead.

Edit:
Yep, the D7000 is an awesome camera, but it costs twice as much as a D90 and the step up from a D90 to a D7000 is far smaller than from a D40 to a D90 - unless video is a requirement.

The length of time that the D90 has been in the Nikon line-up shows the quality of this camera. For the photographer it's a worthwhile upgrade, bringing the tog the tools s/he needs. Since the bottom is dropping out of D90 prices, it may be a shrewd move to buy a nearly new second hand item which would have weathered the worst of the depreciation.

If you have interests in film/videomaking then the D90 has fallen behind somewhat, and perhaps other Nikon options are more worthwhile. The D5100 or D7000 will probably be your options.

Yup - it's the prefect upgrade if you don't want to spring for the more expensive D7000.It has an in-body focus motor and the Nikon CLS wireless flash trigger system - both of which are worth the upgrade on their own.

A very worthy replacement. In fact its quite a step up which I think you will enjoy! The D90 has an internal motor for Auto-Focus for example, something the D40 lacks, this allows you to use any of Nikon's lenses in Auto-Focus mode, great for sports or a quick snap without worrying about time extensive focusing.

Other than that, the sensor is a lot newer, uses better technology and less power. The high ISO noise reduction is far superior ( probably one of the best high ISO of any crop sensor DSLR), as is the general build quality, the D90 has a magnesium alloy body whereas the D40 is all plastic. I wouldn't get another entry level SLR, it will simply not be worth it, if the D40 has given up the ghost this is a perfect opportunity to upgrade.

Another thing to note, the D90 is quite old now so will probably be updated soon! Maybe wait for the upgrade and get the D90 when its fallen in price even more, or just get the upgrade.

Yes a great update especially if the price these days are much lower as you mentioned.