Depends on what kind of cable it is. If it's UF you're stuck with 40A, if it's USE it's 50A, USE-2 55A. Assuming that it's all copper.

It's just UF :-(

If this is a detached garage it might not pass inspection. I have heard of some inspectors rejecting a sub panel in a detached structure if it is not minimum 60 amp. 8/3 is only good for 40 amp.
I don't think it is a problem if it within the same structure.

It's detached.

The line was already run when I bought the place, I'm not digging it (and the expensive landscaping and cement work) up to replace it with a bigger cable. 40 Amps 240V is PLENTY for my uses.

I'll call up and ask about any minimum size. If there is, then they'll lose out on their permit fee.

The disconnect/panel at the detached structure needs to be at least 60A, but it can be fed from a 40A breaker, so you should have no problem, as long as the wire is 8/3 with ground. You will need a ground rod at the detached structure.

Thanks normel, that'll work!

Another code issue that makes no sense, but at least I'm compliant so there won't be any issue.

If you think you are compliant then you should read this thread.

http://www.selfhelpforums.com/showthread.php?t=18557

If you don't get a permit then I hope you don't have any issues when you go to sell the house.