Nikon's new Learn and Explore iPhone app defines ISO as:

ISO originally referred to the sensitivity of film—it's "light gathering" ability. The higher the ISO rating, the greater the film's ability to capture images taken in low light. High ISO film was called fast film—it required a shorter exposure than a low ISO film. For digital photography, ISO refers to the sensitivity—the signal gain—of the camera's sensor.

The ISO setting is one of three elements used to control exposure; the other two are f/stop and shutter speed.

The best reason for most of us to think about buying a new camera body is improved ISO performance. If you want a quick introduction to ISO, check out this comparison of Canon 7D vs. Nikon D300s vs. Sony A500 ISO from Photography Bay. The 100% crops of sample images give a good look at the noise control of these three cameras. Tim and I have been discussing the new 7D at length. Over the weekend, Mencken was telling me about about a new Nikon body, D3s I think, that has a crazy high usable ISO. Nikon's site advertises the D3s as expandable up to ISO 102,400.

Then there is my 2005 Canon Rebel that has a max ISO 1600. Almost every article I've ever read has said not to shoot above ISO 400 on my camera because the noise is awful and leaves the files unusable. I've strictly followed that rule until Saturday night. I had snapped a couple shots at 1600 trying to get something usable in the pitch black theater. Perhaps all the reading I've been doing on ISO inspired me to try something new. Maybe it was the Labbat drafts that left me absent minded on the camera settings. Whatever the reason, I spent the tail end of my night shooting on manual at 1600 ISO with my pop up flash. I was excited by the results showing up on my small screen. The bright colors of the background were showing up and my histogram showed nothing blown out. My bright flash was producing soft light. A slight noise reduction in Lightroom left me with pretty usable files.

So, my advice to everyone is to forget every article you read about the limitations of your camera's ISO and experiment in a low light environment. With the pictures I shot at high ISO, using a flash helped keep the subject sharp and keep the noise lower than those shot with no flash.