It's not the body. And the problems the body has aren't ones that the 40D will necessarily solve.
My 2 cents.
Get a x0D series for the better construction, better viewfinder, better ergonomics and better control.
If you are otherwise happy with your T1i then here's a couple of things to try first.
1: On all EOS cameras the centre AF point has the best performance. Your T1i is no exception, as it's the only cross point. Go into P Tv Av or M. Select the centre AF spot as your only active point.
2: Ai Servo has a better chance of getting the action shot that one shot AF. One Shot AF will actually prevent you taking a shot, unless the camera thinks it is in focus. This will make your moderately fast camera much slower, and the same would be true of a 40D or 7D or 1D. So go to tracking AF (Ai Servo) learn to track for a few seconds, burst burst burst, track for a few seconds, burst burst burst.
3: Consider your lenses. Dark non-constant max aperture lenses are going to really hinder your AF system. The centre AF spot becomes even more sensitive with lenses brighter than f2.8. Spend some money on a bright USM lens. The 50mm f1.4 USM or 85mm f1.8 USM will let in loads of light and really boost your AF performance. And if your AF is fast, your frame rate is up! You'll get the benefit no matter your shooting aperture. If you put slow lenses on any body, you are going to struggle. If you are shooting action, you should be using fast lenses regardless of the body.
4: Consider your format. Where are these pictures going to end up? Are they going to be A2 posters? Or 9x6 prints? Do you really need to shoot RAW? JPEGs, particularly smaller JPEGs without in camera effects, will get the most out of your cameras buffer depth. RAW is a killer, and max resolution is often overkill.
5: Memory card speed. When your 500D came out memory cards were much more expensive. Treat yourself to a class 10 card, if you haven't got one already. This won't make your camera physically faster, but it will reduce buffer bottlenecks when you are piling on the frames.
So yes, there are reasons to buy a better body, but I don't think a 40D is the answer to your problems.
Brighter glass will probably be more effective, as will a look at your technique and settings.
I used a 400D for a few years and it was a different camera with bright glass on it. Centre spot AF. Ai Servo mode. Bright USM glass, faster card. Exactly the same advice I would give to a 40D user.
Thank you all for your insight, opinions, and as always, great advice. I've enjoyed reading the forums here and know that I can count on the group to steer me right when I have a question.
I realized that I didn't provide enough detail in my question after reading some of the responses, so here's the missing info.
First, I do enjoy the T1i, but I am wanting a "better" camera. This doesn't mean I need it of course. The biggest complaint that I have about it is that it doesn't fit my hands as well as a x0 model camera. I also would desire to have a faster shutter speed, but after reading the responses, that may not be as much of a factor as perfecting my technique. My last "complaint" is that it takes long for me to change settings. I think I'm pretty fast at it, but there are some settings that require me to navigate menus rather than just using the dial on the back of a camera. So my reasons for wanting a new camera are to be quicker with it, hope that the faster shutter speed will allow me to capture keeper sports shots, and ergonomics. To help with the ergonomics, I did purchase a vello battery grip which fits my hand great - it just requires me to rotate my camera 90 degrees.
How I shoot sports photography:
I typically use either Manual or Time Value settings. I use my center focus point and set my auto-focus to AI Servo. For these pictures, I use jpeg on the large setting and I'm using a 32G class 10 sandisk memory card. Most of my pictures, if I print them, will be 8x10. I print very few posters if any at all - actually one to date. Most of my pictures I put into memory books or just view online.
As for lenses, I've been using the following: EF-S 17-55 2.8, EF-S 60 2.8, and 70-300 IS 4.0-5.6. Most of the time I use the 70-300 due to the distance between me and the field. Last fall, I was able to use the 17-55 being on the side lines. I primarily shoot in the daylight, outside, but my daughter does dive and the 70-300 suffers greatly in the natatorium lighting. This is where I've been using the 60mm, though it is still a bit far away. Outside, I can shoot at 1/1000 or 1/1250 shutter speed on 70-300 with acceptable results. I keep the aperture set at 5.6 so I don't have to consider changing shutter speed as much when I zoom on the 70-300. I do try to keep my zooming between 135mm and 200mm - just for training as my wish list includes the 70-200 is L. Don't want to end up missing 300mm
I usually turn IS off, unless I forget about it.
So, based upon the feedback I've received, what I need to do is to save and invest in some better glass and work on my technique first, then get a better body later. The cost of the 40D I found is good, but I'm thinking that it will remain "good" and could get better if I wait. There will always be a better deal. In truth, I do want a 7D (don't need, but want). It will preserve my lenses and provide growth room for me at a reasonable price. The 40D I guess was a cost effective stop gap I was hoping to resolve my skill issue, but it's probably better I stay the course and not compromise or I'll be kicking myself later for it. I also considered a used 1D MkII or MkIII as well, but if I go this route, I'll need to refresh my lenses as the only one I have that is compatible today is the 70-300. That's not much of an option for me right now, in the future maybe.
My son's first soccer game is this Saturday. I'll shoot some pics and post them on this thread for feedback. I'm sure it will help if I show you what I'm doing rather than just telling you.
Thank you all for the advice.