What to buy is an immensely personal issue. I don't actually have much hope that you'll buy the camera "Ferrari equivalent" that I'm suggesting - but knowing what is available will give you better perspective.
Added: You could buy what looks to be a pristine condition used
D700 and a Nikkor f/1.8 50mm on ebay UK for GBP1200 all up - see towards end.
That exceeds your budget by GBP 200, and carries the risk of a used camera, AND buys you something akin to a Ferrari in automotive terms.
The D700 has been the second to top low noise low light 35mm camera in the world for about 4 years (the newer larger twice as costly D3s was about a stop better). Even now the very top cameras are just starting to exceed its capabilities. By the time you are finished you will have bought several more lenses - but a single lens will do what you want to start, and adding a cheap kit zoom will add some flexibility.
Why a 50mm lens to start with? See "lens choice" below.
What I'd buy on your budget will draw derisive comments from some. But it IS what I'd buy in your position if at all possible. The most camera per $ yet made if you can get it at that price.
I'd buy a Nikon D700 - probably a used one to meet that budget - but prices are falling with the D800's arrival. "Only" [tm] 12 megapixels. Have a look at these D700 samples and see if that 12 mp is going to bother you. Look at the results in the lowest of lighting conditions.
Usually the lens is a vital component of a system. And it is here too. BUT any sensible lens that meets you requirements with respect to focal length range will work "well enough" on a D700 to make you ecstatic both initially and for a while".
Add whatever lens most suits out of the rest of your budget and work up as you can afford. A 50mm f/1.8 is a fine starting street lens. (Note that 24 mp gives you 40% more pixels per inch. 36mp (top of the 35mm crop so far) gives you 70% more pixels per inch BUT will be downsized to much lower for quality in almost every case.
Most will recommend "more lens" and "less camera". I can understand that. But, I'd try for a D700! :-).
These by FDPReview - one of the very top camera information websites available - according to me (whatever) and a very large number of other people.
Many many other reviews .
The 550d is sure to be a fine camera in its class.
It has features that the D700 lacks - such as video capability.
But there is ! no comparison to the capabilities of a D700 if you are interested in taking real world photos.
The D700 is amongst the top handful of 35mm low light photo taking systems ever made.
You will never regret owning one.
I mentioned 50mm as a starting point because 50mm was for many decades THE standard full frame lens if you had a fixed lens "rangefinder" camera. The lens / film size combination approximates the human eye in perspective. Some photographers will happily take eg a D700 and a 50 mm f/1.8 or "faster" lens and happily go out for a day's street photography. I find it too limiting but it's great when you want large aperture and shallow depth of field.
You can buy a 50 mm f/1.8 Nikkor used in very good condition on ebay UK for GBP65 - and sometimes probably for rather less.
All manufacturers make a low cost but high performance 50mm "fast" prime lens as part of their range. Aperture is usually about f/1.8 which allows in 3 x as much light as an f/2.8, 4 x as much light in as a f/3.5 and 9 x as much as a f/5.6! With the low light performance of a D700 and an f/1.8 lens, the camera will see better "in the dark" than you do.
A manufacturer's 50mm prime lens is almost always the lowest cost lens they sell BUT because it is easy to make and has been being made in one form or other for decades (literally) the value for money is superb and the performance is as good as that of zooms costing many times the price. ie quality per $ a Rokkor 50mm is hard to beat and it is a very usable lens in a street and interview situation. Yes, you WILL need "foot zoom" to use it in every situation. But it will do most of what you most want to do.
Maybe you want to buy a very cheap used DSLR first to get a feel for what can be done. Even a many years old one with say about 5 or 6 megapixels and APSC sensor will produce results that are amazing compared to any "point & shoot". Megapixels are nice BUT other things matter more in most cases.
Example of used D700 in UK:
D700 UK ebay.
Claimed shutter count of 461 !!! <- indistinguishable from new if true.
Seller has 351 trades with 100% feedback.
ebay UK D700 2 batteries - GBP1100 including postage in UK - no lens
Sandisk extreme III 2 GB memory card
~ The wonderful world of 50mm prime lenses - that's what the page is called ! :-).
An excellent "why a beginner wants to use a 50mm prime lens" page.
~ Rediscovering the 50mm prime lens - this is an advertisng page for a course but summarises the idea.
50mm, f/1.8, 1/45s no flash, tungsten-fluro mix etc as per next image. Object here is to demonstrate field of view and grouping with 50mm lens on APSC and effect on facial perspectives etc. This is handheld at 800 ISO - obviously with this camera in this light a 'quality' photo would need a tripod or additional (mood spoiling) lighting.
~ Rave writeup - Leica M9 + 50mm - Classic Combination?
A number of photo sample accompany his rhapsodising. He says -
- There's nothing more classic than a rangefinder camera and a 50mm prime standard lens. Apart from the fact that this is the best camera and lens I've ever bought, the combination of the M9 and Zeiss 50mm is an option I find very enjoyable to use. Also far from feeling restricted by just using one prime lens, I find it a liberating, creative and versatile kit.
~ Prime lenses - and why you really need to get your paws on one. He says:
... What do you want out of your photography? If you are looking for convenience and holiday snaps, by all means, go for the first and best zoom lens. Hell, I’ll admit it freely: Most of my photos are taken with zoom lenses (I’ve got a Canon 28-135mm f/3.5 IS, a Sigma 17-35 f/2.8-4.0 and a Sigma 70-200 f/2.8 that I use extensively), but still, there’s a certain feeling of zen about using prime lenses.
They can be slightly limited, sure, but they’re also sharper than a surgeon’s scalpel, cheap as a bag of crisps, and they are just a better idea overall, especially as you are just learning about photography.
Image: 50mm f/1.8 lens. 1/45s.
APSC 1.5:1 crop sensor so 75mm equivalent.
Tungsten/fluro lighting mix, no flash. Manual white balance.
Note depth of field from large aperture.
Main aim here is to demonstrate acceptability or not, as the user may judge, for portraiture at this sort of range
Response to depth of field query:
NB Photo below is using a 500 mm lens.
And think a canon 600d might be my answer.. the lens you get with it is a 18-135IS. Would you say that this lens can be used to street style (blurry background?)
Small depth of field (leading to "blur backgrounds") is enhanced with large aperture (small f number), longer focal length and closeness to subject compared to background. You will be able to achieve this effect to a reasonable extent with the 18-135 kit lens but a lens with larger maximum aperture will do this in a wider range of circumstances.
As can be seen below, even at f/8, shallow depth of field can be achieved if other conditions are met.
The photo below was taken with a fixed f/8 mirror lens, 500mm focal length on an APSC camera (750mm equivalent on full frame) with the bird at about minimum focusing distance of about 5 metres. Even at f/8 the long focal length and short distance (relatively) to subject result in a very shallow depth of field - probably under 2 inches in this photo.
The "donut" shapes in the out of focus area are caused by the "mirror" lens optics. The depth of field would be the same for a conventional lens of the same focal length.