Hi mabhi,
I do not have direct experience with the D3100 or the 1100D. Let me share my views and some of my points have already been expressed in other responses.
I always liked stunning sharp pictures with well saturated colours taken by Nikon SLRs. I am talking about pre-digital era. I bought a Nikon film SLR in 1982 with a 50/1.8 prime lens and I have used that camera until a few years ago.
A couple of years ago, when I was not in a position to spend a lot but still wanted to get a DSLR, I did not do too much research and being a 'Nikon person' went to the Nikon dealer and bought the lowest priced DSLR with its kit lens (Nikon D3000). In the next 6 months, I took only about 200 shots, all indoors at home, and never took it outside for a shoot. I was terribly disappointed with its low-light (or higher ISO) performance. It was abysmal, there were a lot of grains even at ISO 800. Low ISO performance was quite Nikon-like though. I eventually sold it at a huge loss, the camera was almost new though.
In summer 2010 I ultimately took a hard decision: switched to Canon (fortunately I did not have any other Nikon lenses lying around). Got the phenomenal 550D with its kit lens. A few months later, I also added the very celebrated and expensive 15-85 lens to take full advantage of the camera's potential.
My point is as follows: You have to know what you really want your camera to do. I usually never use flash for indoors and nights, and I need a camera that is capable of doing that even without a fast prime lens. At the same time I like nature photography, and that's why I need a good enough wide lens with a bit of zoom. The 15-85 is simply stunning.
I made a mistake with the D3000. However, I hear that the new D3100 has a lot better low light performance. Nikon also has better flash system, if you are interested in that (although not quite sure about the features of the D3100). In general, Nikon also has reasonably priced excellent quality fast prime lenses. One word of caution: from what I hear, the auto ISO feature is not properly implemented. At auto ISO, with flash the camera sets itself at ISO 3200. It's not only the D3100 where it happens, the problem is there even with D7000. Find out if Nikon has done something about this in the recent months. Another caution: assuming you would shoot in the RAW format, you would need to buy a RAW-processing software from a third party, because Nikon's software package supplied with the camera is the bare minimum and is far from adequate.
With the 550D, my usual shoot is the following: set auto iso, set aperture priority, set aperture, the camera chooses iso, exposure, and shutter speed. Frame, and shoot. The 63-point metering is perfect, exposure and auto focussing is done perfectly and I hardly ever miss a shot. For a photographer or a hobbyist, this is the most important thing, never to miss a shot. I use this setting even for night shoots at high iso. Only for fast moving objects (this is not really my area) instead of aperture priority I use the shutterspeed priority and let the camera do the rest. In the last year and a half, I have about 98% keepers. I always shoot in the RAW mode, so that I can do every desired adjustment later in post-processing. Canon gives a very good software called Digital Photo Professional and many professionals use it for RAW conversion to jpgs.
Am I giving a recommendation for Canon? Not really. As I said, I do not know the 1100D. I have held the previous 1000D in hand, and although that camera felt a bit plasticky and cheap in hand, but took quite good shots at iso 800 and acceptable till 1600. The 1100D should do better, just check the dpreview.com reviews and forum discussions (btw, this is a great site for camera and related stuff).
You can also consider the 550D. I bought it at more than 50k, but now the street price is well under 40k. This is steal of a camera at that price. However, there is a problem, the kit lens (although of reasonble quality and sharp) is not quite good enough for its 18mp, and you need a L or a near-L lens with better resolution. In addition, the better lens will give you better colour saturations, and generally lower distortions and aberrations. Unlike Nikon, Canon does not have too many good lenses at low costs. They have stunning lenses, but their prices are also stunning. I am still looking for a good and fast prime lens (my favourites).
Do not pay too much attention to the number of auto-focussing points. Canon has less, but my 550D focuses fast and beautifully, and yes, for the D3100 and upto D5100, you have to use AF-S lenses if you want to auto-focus (AF and other lenses can be manually focussed of course).
So there you see, there are pros and cons on each side. You have to weigh in all these things depending on your shooting style and subjects and the money you want to spend.
Regards.