Nikon or Canon both have competitive models that start at around $700. Both have a great selection of lens to work with their low end DSLR's. I happen to prefer Nikon because I already have a number of good Nikon/Nikkor lenses. If you don't have any lens yet, either company will be a fine choice.
I went to a pretty good photo school in California for like 6 months and was told that for shooting action that Canon makes a better chip. The reason for this is that the way the chip is link with the image processors it allows for higher ISO without as much noise so when shooting in lower light it is easier to use a faster shutter speed but avoid the grain the i know i get on my nikon. However the lens argument is pretty good to, you can ultimately take great surf pics with the nikon or the canon so if you have lenses for either i recommend purchasing according to lenses.
Ditto on the recommendations you've had so far, especially on the lens purchases. Once you buy into a system, you sort of have to stay with it or lay out a much larger bundle of money all over again. Name brand lenses like Nikon and Canon are not interchangable, although you can get aftermarket lenses that will fit, their optics and engineering are not generally as high quality as the Nikons and Canons.
a used canon 20d will only run you about $300 for the body, and its still a great camera, its just been replaced 3 times so they go for cheap.
a canon 50mm f/1.8 brand new is $80
then a canon 70-200 f/4L goes for about $500 used i think, which isn't a bad lens to start out with for surf.
or for about the same price you could get the 200mm f/2.8 fixed lens
Get Nikon. Their sensors have progressed so much within the recent years that it almost puts Canon to shame. Their high end camera (D3) shoots at 9fps full frame 12.3 mp, and 12fps at a cropped 6.3 mp.
Don't be sold just by megapixels, a better sensor, faster camera and faster lens (aperture) will always produce a better image. If you look used, you can find a Nikon D2Hs, which shoots 8fps(raw) with a 40 capture buffer, for between $500 and $2500 on ebay. But it has a whopping 4.1 megapixels... but is still used professionally for sports photography. Just make sure you know what you're buying. That Nikon is one of their old professional cameras.
For starter cameras, the Canon XSi and Nikon D60 are both excellent choices. Both shoot ~3fps and can be found online with a 18-55mm starter lens for around $600. If you're willing to spend another $300 it would be well worth it, considering both the XSi and D60 do not have autofocus mechanisms on the body of the camera (which is why they are so cheap). By getting the D50/D70/D80/D90 (for Nikon) it will have the autofocus, which will allow you to buy cheaper lenses in the long run. For Canon you can get the 20D, 30D, 40D or the new 50D(which is expensive) or some of the other ones used for a decent price.
I recommend sticking with either Canon or Nikkor lenses. You may be able to get Sigma or Tamron for a good price, but the quality of the glass isn't as good. For any surfing on the east coast, you should be fine with a 300mm max. More if you like to shoot from a large distance, but even standing halfway up the beach, my 70-300mm Nikkor does the trick. You can pick up a 200-300mm either brand with about f/4.0-f/5.6 for around $250 for the 200 or $550 for the 300. If you want to do any indoor sports shooting (flashes don't do much from a distance) you're going to need a lens with a wider aperture (the f number) wider = smaller. So a good lens for an indoor sports would be like the Nikkor 70-200mmVR f/2.8 zoom. But that will cost about $1700. Wide apertures cost a lot of money because it has more pieces of glass, but can create a real nice shot, with some bokeh in the background. Bokeh is that blurriness behind the subject. The wider the aperture the more bokeh that will be produced. So like the prime (single lens length, something like 50mm) Nikkor 50mm f/1.8 is incredibly sharp, and at f/1.8 can produce a very exquisite bokeh, or possibly sickening depending on the background. But at f/11 will have an almost clear background.
Either way you go, make sure oyu're willing to spend money. Photography is an expensive hobby, but you don't need the best equipment to get good pictures. Just need to have a good sense of creativity.
Edit: One other thing, since I explained all of that, and not really the two that you should buy... Either get the D60 or Rebel XSi since they are both cheap, depending which brand you choose to go down. The way I chose was by going to the store, and playing with the lenses. Since you'll have that brand forever, choose based on the lens since you'll always have them, but can upgrade the camera body.
Do NOT by Samsung, Olympus, or any of the other brands. They may be cheaper, but their sensors just can't compare with that of Nikon and Canon
While you need to realize you are buying into a system, make sure that you also check compatibility within a system. Back when I bought my first digital camera, a Nikon D70, I presumed that I could easily continue to use my AI Nikkor lenses. Not necessarily so. Using an old 28mm lens with the new digital camera just didn't do what I expected it to do. It played havoc with the exposure because most newer digital cameras require connectors within the lens to effectively communicate with the camera. There's much more involved these days, so ensure any lenses (especially through E-Bay) are completely compatible with whatever camera you buy. Given more time, the likelihood of incompatibility will lessen, but right now any ''deals'' you see may not really be a ''deal'' in fact if the lens of the same brand name is not compatible.