Yeah, if you're shooting in Auto and pop the flash, the camera will lower the ISO to about 200 or 400. If you're in a party setting, this will use your flash as a "key flash" where everything right in front of your camera will be bright, almost over exposed, and everything else in the picture dark. This is the typical point and shoot camera result many people coming from P&S are used to.
If you want a more even result you'll have to take the camera out of auto mode and learn to use the flash exposure compensation, lower the shutter speed (to bring in more ambient light). This will give you better results, and you can adjust these settings to suit your tastes. Also, know that the wider you set your aperture, the farther you can "throw" the flash. This means that it won't only light the subjects directly in front of your lens, but others in the background.
I use my flash whenever my camera meter says I'd need to shoot above ISO 800 to get my shot. Also when I want to freeze the action, I'll use a slower shutter speed to get my ambient light, to reduce a bit of the key flash effect, and to still freeze the action. However, most times your flash needs to be strong enough to in fact freeze the flash, so the key effect may be unavoidable. If I can give you one tip it would be to take the camera out of auto mode and learn to control your flash compensation, and shutter speed to use the flash to it's greatest advantage. This way you can keep your ISO to levels that are acceptable to you, and then "ride" the shutter speed to control the available light. The power your flash has over your picture is directly controlled by the flash compensation. Your shutter speed, and ISO controls the amount of ambient light in your picture, it has no effect on how much flash is used in your picture. If you want a dark background increase it, if you want a background with more light decrease it. Of course your aperture also has an effect on this ambient light too.
Learning just a bit of how flash behaves can really take your picture taking to the next level, putting you on a different level than the vast majority of shutterbugs you see running around out there!