ISO in "lower-end" cameras
When you "up" the ISO, you are telling the SENSOR to work a lot harder to try and resolve the image (the light coming through the lens). Above ISO-400, on the introductory cameras, is an area that begins to "breakdown" and the image becomes noticeably "strained." You will get a brighter image, along with all sorts of "extra" data that needs to be cleaned out (disguised) by post-processing software (i.e., Noise Ninja or others).
From my personal experience, on the α700 camera, that breakdown of image quality usually occurs above ISO-1600, but that is also contingent upon how much light you have to begin with. Given certain lighting conditions and a digital sensor can generate noise at almost any ISO, it is just that some are better about not doing it than others.
Anyway ... this is just another reason to invest in a better body. The one thing bear in mind is that your digital camera body and its associated sensor IS your "FILM." The better the sensor ... the better the "FILM."
As the character Dirty Harry says at the end of the film, Magnum Force: "A man's got to know his limitations." Believe me when I say that it applies with photography equipment quite a bit.
When you are shooting a bright object ... drop your ISO to 100 or 200. Do not have it up at 400 or higher. You only do that to speed up your shot, which means you would have completely LOST the shot, had you not ramped up the shutter speed to "catch it." It is a photographer's decision, at that point. You are struggling to get the "best shot" with what you have available to you. The safest bet is to consider ISO-400 and ISO-800 indoor ISO ONLY, there is no reason to use it outdoors, normally, if the sun is up and it is not an eclipse.
I also recommend: Manual Mode; Aperture = f/4 or f/5.6; Shutter speed = 1/60; & ISO-400 for most indoor flash shots.