This is an easy decision if you have glass for a particular system (Lenses). Both the D70 and now the new Rebel XT are excellent cameras. I actually bought the D70 last summer and have no regrets. I personally like the feel of the D70 as compared to the Rebel (though I haven't looked at the new XT version yet). I didn't have any investment in glass, so it was more of a toss up for me.
http://www.dpreview.com/ is a fantastic site, and I highly recommend you look at Phil's reviews for both systems. For someone who is a little partial for Nikon, check out
http://www.bythom.com (he e-publishes a guide for the D70 which is really a must read for any D70 owner)
My best suggestion is to go try it out. Most likely the decision will be made apparent then. Its such a huge difference between DSLRs and digicams (and investment wise) that its important to be happy with the lines of lenses offered to you. Camera bodys will come and go, but a good lens should last a VERY long time (lifetime sounded way to cliche)
Mark