Avoid on-camera flash as much as possible. But when there's insufficient light to get a decent shot without it, here's a simple way to get more flattering people pictures with it.
I'm here today to praise Night Portrait mode. This setting, which appears on just about every digital camera, combines the light that is produced by your camera's flash with existing "ambient" light. This is good, because the flash alone projects a harsh, flat light with unflattering shadows; few people photograph well under such lighting.
While it's better to shoot with the flash raised or off to the side of the camera, this isn't possible with most point-and-shoot models. So, use Night Portrait and take advantage of the off-camera light around you.
Direct light emphasizes zits, lines on faces that make the subject appear older or sickly. Harsh shadows behind subject are distraction.
A face needs to be lit from the side and back to give it shape, and Night Portrait mode lets this light in and balances its intensity so the resulting image looks more natural It does this by providing a long exposure, which brightens the background lighting, to complement the light from the flash.
When shooting in Night Portrait, look for light sources that are off to either side and behind your subject. These will fill in the areas that would be treated as deep, unflattering shadows by straight flash.
Don't have Night Portrait? Turn your camera's flash mode control to Flash On (a lightning bolt). Don't choose Auto Flash, since that won't pick a slower shutter speed. Flash On will give you a slightly longer exposure in low light. Although the balance between flash and ambient light might not be quite as fine, it'll still be an improvement!
Tip: Use vibration reduction when in Night Portrait mode. Even better: Use a tripod if possible.