I used to have 400D. Upgraded to 60D. I also had the same question - the body or the glass? ISO is much better now, and there's no noise even if I'm shooting at ISO 6400! That's just so awesome.
The kit lens (18-135) is also great since it covers a huge focal range, and now I don't need to change my lens so often. I do that only to change to a prime lens or a macro, but other than that - no need. I used to have 18-55 and 55-300 with my 400D.
So, I upgraded the body, but with that, I also got an amazing lens!
