ISO EXPLAINED

You are probably familiar with ISO on film used in a film camera. It's the 'speed' of the film - higher ISO values mean you can take photos in lower light.

But what about in the digital world?

Surprisingly, there is an ISO setting on your Digital camera. And although there is no longer any film, the ISO setting still plays a vital role.

ISO indicates your digital camera's sensitivity to light. The higher the number, the less light is needed to take a photo that is bright enough (correctly exposed).
In bright light (like the middle of a sunny day), you'll normally use ISO 50 or ISO 100. These are the lowest settings and can be used because there is lots of light around.
However, in lower light, your camera needs some help. There are two ways of doing this:

Decrease Shutter Speed
With a slower shutter speed, the camera has more time to 'take in' the amount of light it needs. Unfortunately though, the slower the shutter speed, the more chance that your images will turn out blurry.

Increase ISO
Rather than decrease the shutter speed, you can increase the ISO. As I said above, this will increase the sensitivity of the camera which means you can get the same shot with less light entering the camera. Thus the shutter speed can be kept low enough to avoid blurry images.
As increasing the ISO will increase the shutter speed, a high ISO will also help when taking fast moving sports shots. You'll get clear, crisp shots with no blur.
However, I still recommend you use the lowest ISO possible. Why?

Problems of using a high ISO
Using a higher ISO means the camera has less light to work with. Unfortunately this also means that 'noise' is introduced into your camera. If you'd like to find out exactly what noise is and how to eliminate it, check out the free bonus on noise that comes with my Digital Photo Secrets book.
Your camera's highest one or two ISO values will produce a lot of noise in your image, so I suggest avoiding them unless the light is so low that you have no other choice.

Auto ISO
Fortunately most of the time you don't need to worry about selecting the correct ISO. Most cameras have an "Auto ISO" setting. With Auto ISO, the camera will look at the amount of light in the scene and change the ISO appropriately so that the shutter speed doesn't get too slow.

ISO Values
If you choose to use a manual ISO, what values should you use?
ISO 50-100. Suitable for bright light (like outdoors on a sunny day.
ISO 200. Great for overcast or cloudy days. However on budget cameras some noise will be seen in your image.
ISO 400 and above. Use for indoor or night shots (even if you use a flash). Also useful to freeze the action in sports shots. These values will produce the most noise.
Noise in digital cameras is a huge problem, and one we'll have to live with for a while. Find out what causes noise, and how to avoid it with a brand new free bonus that comes with my "Digital Photography Secrets" book. I even show you how to use a leading noise reduction program to fix noisy images you've already taken!

Taken from : Digital Photography Secrets
by Davide Peterson
(www.digital-photo-secrets.com)