We also have be contemplating upgrading cameras. We found a used Nikon D300 for what we considered a reasonable price and just got it in the mail this weekend. While the camera itself is not much bigger than our old one, the extra battery grip makes it appear massive in comparison.
A quicker lens came with it, and so far we have had mixed results. The sharpness of the pictures look good. It is hard to tell though if it is the lens or the camera without further use. In addition we need to figure out the best camera settings to minimize post processing time on the computer.
We would much rather spend time on the computer talking to family than editing pictures. Today we were able to talk to Grandpa and Grandma as well as Uncle Steve and Aunt Aubrey. It is nice to be able to see them while talking, even though Michaela gets camera shy.