Hi again Emma,
Willie has made some good suggestions above especially regarding the lighting. You have already PM'd me regarding some of the above issues raised and openly admit it was basically a point and shoot with in built flash and hope for the best. Unfortunately, the camera was left on shutter priority at 1/160 which is a little slow for moving subjects hence the slight lack of focus and blurring. Your camera has a face detection feature which ensures that the face is in focus, but only works if either Auto or Portrait Mode is selected. Until you are familiar with the camera, I would start taking your shots in this mode and let the camera do the work for you. Then check the EXIF data to see which settings are giving you the best results. Then you can fine tune that in manual mode once you are a bit more confident. In addition to the photo modes, you also have colour and sharpness adjustment. If you do not like the colours that your camera is giving you can set up a user defined colour saturation and sharpness. your manual should tell you how to do this.
Fortunately in this instance the end result was not unretrievable with a bit of post pic editing. I understand from your PM that you have Corel PSP. Brilliant, cos thats what i used to make my adjustments which were as follows.
1) Under Adjustments on the main menu click on "Digital camera noise removal."
2) Select tha areas with the most noise and then set the amount of noise reduction followed by the correction blend and sharpness. In your case I selected 50% for each of the noise reduction options, 70% for the correction blend and 30% for the sharpening.
3) For the saturation select adlustment, Hue and saturation, Hue/Saturation/Lightness.
4)Use the slider bars to increase the saturation and lightness until you achieve a colour that you like. Dont oversaturate. Try to keep the image looking as natural as possible.
5) To adjust curves Select Adjust, Brightness and Contrast, curves.
6) In the dialogue box thre are some Auto adjustments that can be selected for Contrast Colour and levels. In general I only ever use the Auto settings but you can click on the line of the histograph and drag the line to fine tune. To do this correctly I suggest you first get a grip of how to understand histograms.
Hope that all helps.