Creating a soft, out of focus background when you're shooting portraits will mean your subject will be the centre of attention and any distracting objects that are behind them are blurred out of view. If you want to create this look there are several ways to do it, without having to necessarily switch to manual, including a couple of ways compact users can create the effect too.
Compact and even most DSLRs ( useful if you don't want to be changing apertures manually) have a Portrait Mode which you can switch to from either the camera's menu system or the mode dial on top of the camera. By switching to Portrait Mode the camera knows you want to use a larger aperture (smaller f number) which will allow the background to be thrown out of focus but keep your subject sharp in frame.
Move your subject
To make the effect more prominent, try putting more distance between your subject and what's behind them.
If you're a DSLR users, switching to a longer zoom with wider maximum apertures or a prime lens that's between 70mm and 150mm will help create a shallow depth of field, giving you the blurry background you're searching for. If you have a zoom lens use the longer end of the zoom rather than the wide as even though the wider end may have a larger maximum aperture, it's more likely to distort the features of your subject. However, by using longer focal lengths, particularly with a wide to moderate aperture, will produce shots that flatter their features which is something everyone wants. Using longer lenses also means you don't have to work too close to your subject and as a result they'll be more comfortable and you'll have more natural looking portraits. Just keep an eye on your shutter speeds when using long lenses if you want to work hand held as you don't want shake creeping into your shots.
By switching to Aperture Priority Mode you'll be able to choose which aperture you use while the camera figures everything else out for itself. The larger the aperture you pick (smaller f number) the shallower your depth of field will be. So, if you want those blurry backgrounds try and use a larger aperture.