The Nikon D40 is absolutely capable of delivering excellent portfolio worthy images. If you want to continue to use that body, I highly recommend sending it in to Nikon for a cleaning and a general checkup. If sand did enter any parts of the body, continuing to use it could just cause more issues. As another user pointed out, a great lens to start with would be the Nikkor f/1.8 lens, preferably the soon to be released version with autofocus included.

If you are looking for great portfolio worthy images, your best investment is almost always in high quality lenses rather then body upgrades. Consider this as your next step before spending big bucks on a body that might come with a lens of similar quality to what you already have. The other big advantage to purchasing lenses is that they typically hold their value for a much longer period of time, where as body's need to be replaced every few years if you want the next new features and functions.

From what I gather it sounds like you are ready to take a deeper dive into photography and get more serious shots that can be printed large and shown off. The best way to do this is to focus on composition and read books, articles, magazines, and websites like this, then get out and shoot shoot shoot! I would recommend getting a lens with a larger aperture but for a low cost (under $200 USD) to get started with as well!