Descision – Sell my investment property?

Hi, thanks in advance to your help. This is complex (well at least for me it is) so if you need any more info, just ask.

My current situation is as follows.
 My own home is worth $850,000. (Just had it valued) in an excellent growth area in Brisbane (Within 5ks of the CBD), I currently owe about $500k.
 I also have a single investment property in Brisbane, a single bedroom unit at Southbank, that I have interest only loans of $320k. It's negatively geared with me forking out $500 a fortnight before my accountant gets fancy with the tax man.

Overall I'm pretty happy with the situation, however the cashflow on my salary is … let's say I'm controlled with my spending.

So what's changing? The family (wife) wants to move house. Our current investigations have us spending $800,000 on a new home. I find it hard to believe that I could keep my current home as an investment and buy a new home. Just not enough income. ($120k before tax)

My question? 

So in order to buy a new home, do I sell the investment unit (Value of $360k) and keep my current home as in investment property OR…   Just sell my current home and keep the unit?

The reasons this a hard descision for me are:
1. I believe my current home will have a greater captial growth
2. Selling my unit will attact capital gains tax, (about $40k over the last 4 years)
3. Renting my home will give me $600 a week income vs $375 for the unit.

I started down this path to remove my personal debt (own home loan) while reducing my significant contributuion to ATO.

Any advice or reading suggestions would be most welcome.

Regards

Lincoln