ISO on DSLRs is the equivalent of the speed of the film (i.e. 400, 600, etc.). The higher the number the more sensitive the image sensor and the possibility to take pictures in low-light is possible. The problem is that the higher the number, the more "noise" you will see in your photos. Noise is to digital cameras like grain is to film cameras. Some photographers enjoy noise as they feel it adds something to a particular photo while others can't stand it.
The problem is that low level cameras (such as Point and Shoots or older DSLRs) don't do too well with high ISO settings. When I say high I mean anywhere from 1,250 and up. Some of the older bodies have noticeable noise at even ISO 800.
Another thing to understand is that if the photo is underexposed while shooting with a high ISO, noise will be even more apparent, especially in the dark areas of the photo. I would rather my photo to be slightly overexposed than under when using a high ISO setting.
The good news is that cameras are just getting better and better at allowing the user to shoot high ISO while resulting in cleaner noise free images before post processing.
For example, a properly exposed photo from my Canon 1D Mark III is usually fine up to an ISO of 3,200. A little bit of noise reduction software and its rarely noticeable. On my Canon 50D I am OK shooting at an ISO of 1,000, but prefer not to go higher than 1,000 unless I absolutely must.
I received my Canon 1D Mark IV about two weeks ago. The day it arrived I figured I would try some high ISO shots.
A lot of wedding photography usually takes place in dimly lit churches, halls, and rooms which we need the best low light setups possible in order to capture the moment.
The following photos you are going to see are shot at an ISO of 51,200. YES! Fifty one thousand and two hundred! Sure, it isn't native ISO (it is expanded), but it's still pretty crazy. The first shot is direct out of camera. Its a bit dark, the noise is noticeable in the dark left hand side as well as in the shadows on her face. The final one has a few adjustments (Temperature, Contrast, Highlight Recovery) done to it, as well as noise reduction software run on it in Photoshop. You can see a purple cast on her lower left cheek which is the light from my computer monitor. I could have adjusted it, but I am just using these photos to show how sharp the photo still is so I just decided to leave it be.
24-70 2.8L at 70mm
Do some tests with your camera to see what ISO you can go up to and still get usable images. I used to be afraid to shoot at a high ISO for fear of too much noise. It is better to have an usable, in focus photo with noise, then it is to have an unusable, out of focus shot without.