I currently have a Canon G7 (point and shoot) 10 mp, and it does a reasonable/good job with basics.

I'm looking to upgrade for;

1) expecting MUCH better overall image quality
2) ability to shoot action/sports (mostly baseball)
3) better shots indoors and or with low light

I have already realized that I;

A) do want 2 good/very good lenses that will last up to 10 years, and that the body will become sub-optimal quickly (2, 3 years)
B) do not need/want video capability
c) there is a steep learning curve with these cameras

To start I'm thinking of a Nikon D300, or a Canon 50D or 40D. The first two are certainly excellent/top notch cameras. But I'm also thinking that they might be over my head or just give me marginal image quality over the 40D.

Any thoughts would be appreciated

Any of the above would be fine. Pick a price point and go.

I still think the D90 would be your best bet. The video function does not compromise the non video portion of the camera.

The smaller Olympus models also are nice choices. There's a lot to be said for light and small.