A 40 gallon hot water heater should be sufficient for two people unless they are taking very long (>30 minute) hot showers.

Are sure it is 40 gallons, it may only be 30 gallons. Even at 30 gallons it should be sufficient if it is operating correctly.

Here are some things to check:

Open the drain to let out any sediment at the bottom. The sediment can get so thick that is acts as an insulator between the water and flame.

Set the temperature at 125 degrees. You can buy an inexpensive thermometer to check this.

Make sure the hot water heater is connected properly to the hot and cold water plumbing. If the cold water supply is connected to the hot water outlet then the water heater operates very inefficiently. This happened in my house.

Make sure the hot facuet washer isn't swelling during use and gradualy restricting hot water flow. Happens a lot and people buy a new heater before finding the soft washer.
To expand on what mike is saying about reversed cold in and hot out lines,a split/missing dip tube does the same thing. Cold inlet has a plastic tube that carrys cold water to bottom of tank. The tube is easliy melted and drops off during installation. To test,one person opens hot water facuet in tube and lets secound person near heater know when water cools. Long before water cools at facuet the heater should come on. If you must test by yourself,turn hot facuet on and go to heater to feel outflow line. If that tests ok,make certain burner has a large blue flame.

The solutions provided are considerable and I agree that you can get a successful solution. But if you have to deal with any electric device, I suggest that you get a professional inspection and then go for a solution.