Personally, I favor either the Nikon D70 or D50 and the Canon Digital
Rebel or the Canon 20D.  Of those my choice would be the Canon 20D.

I would not choose the kit lens.  I prefer the 17mm-85mm zoom as a
standard lens.  To get great face shots you can purchase a Canon (normal
fixed lens) 50mm lens.  With the factor for a non-35mm sensor it would
be around a 75 to 80mm lens great for portraits.  They can be had (1.8)
for very cheap and for a couple of hundred more you can get the faster 1.4.

Right now Canon is the leader in DSLR with Nikon not far behind.

This question would be better suited to rec.photo.digital than here,
and it's a busier group. I'm not techy enough to answer the lens
question myself but if it's slow in here you're sure to get a good
response in there.

drray, digital SLRs have their own dedicated newsgroup:

 rec.photo.digital.slr-systems

However, be warned that there are a few folks there who will probably
answer your question rudely with "RTFM", rather than trying to help you
out!  The rest are OK, though.  There is also a bias towards Canon, and
anything not Canon is "rubbish".  Again, just mentally filter what you
read.

Thanks for asking here.

Oh, and if you need macro photos but with a greater working distance, look
out for the Panasonic FZ5 (it's not a DSLR) which has a tele-macro
setting.  This provides a 90mm picture width with a working distance of
about 90cm.  The FZ5 probably costs less than one of the lenses for the
E-500!  Might be worth a test, at least.

David

Going for a DSLR seems definitively a good choice as the bigger sensors of
these cameras allow for higher ISO which in turn would allow you to leave
out the flash.  Even if you use an external flash, you can buy one that
has a swiveling flash so you can do indirect flashing - should improve
detail quality as well.

I guess if you always seem to be doing the same kinds of shots (vs.
distance, environment, motif) one lens is probably enough - maybe even a
fixed focal length one which usually has better quality and is greater
aperture.

Since your requirements seem to be special I'd try to go to a local shop
and lend a camera (or even better several) for a test series.  But for
fairness reasons you should then buy it there.

Kind regards

   robert

Your problem is not lenses, your problem is lighting.
Any reasonably low distortion lens will work. For a 35mm slr this would be
lenses in the 50-100mm class. In fact I would use these lenses on a digital
slr regardless of the magnification issue.
You will need to learn some basics about flash photography and exposure.
A ring flash will probably solve most your dilemma. These are available with
the ability to mate with the camera autoexposure system.

"Ring Flash" is definitely the key word here.