I just got a DS lite for my oldest. My friend Mel got a DSi for her oldest. There are three differences. DSi has a camera, plays music and it can sort of surf the web. I say sort of because the browser is lousy and Flash doesn't work on it. You can however download games from Nintendo for points like with Wii. The camera photos only look good on the DSi, the quality is just not there to print them, but you can do fun things with the DSi editing tools & send them to other DSi users. The music quality is ok. If you already have an mp3 player, you won't be impressed with the sound on the DSi.
I think it comes down to what you will use it for. I had assumed when he saw his friend's DSi he'd be all bummed he didn't get it. But. My son just wants to play games. He has an mp3 player & uses my old P&S camera. Once he discovered he could not play Crush the Castle or Mad Truckers on the browser (because they require flash) he was done envying it. The friend doesn't have an mp3 player & is really happy with that option on the DSi. The camera & the downloadable games seem to be decent enough add ons but he doesn't use them hardly at all.
Another friend's DD want the DSi because her friends have it and they chat & send photos to one another with it over the DSi net thing, games are secondary. If she wasn't 8 my friend says she'd just get her an iTouch.