Can the Nikon D3100 18-55mmVR lens take good Portraits?
I don't expect the background to be super blurry but at least blurry so my subject is going to be sharp
kinda like this: 
Pick up a 50mm 1.8f or 35mm 1.4f
It will be fine… Especially if you are doing environmental portraits where you don't want the background to be totally creamy anyways.
Set for portrait mode or aperture for widest (f/5.6 probably), set focal length to 55mm, and get as close as you can to your subject.
The fast primes are usually overkill. 1.8 at 50mm or 1.4 at 35mm will make different portions of your subject's face soft below about 2.8.
The lens you have can produce good portrait photos
The 35 mm lens is too short for shooting portrats, however the 50 mm f/1.8 is a great prime portrait lens
With that lens at 55mm you need to work at max aperture (f5.6) and keep your main subject well forward of the background you want blurred. I have seen casual portraits taken with that lens at 55mm with somewhat blurred background.
Indeed a 50mm f1.4 or 50mm f1.8 is going to blur the background more, but it will get your bank manager all tizzed! 35mm is too short for good portraits.
It would not be my first choice in a portraiture lens, but as long as you are not expecting a lot of background blur, try it and see.
If you are asking this question as you are contemplating purchasing this camera, realize that this lens is used for all Nikon entry level kits, so if you buy a D5200 for example with a 18-55mm lens, it will be the same one.
So if you asked the same question about the D5200, the answer would be the same. It is the lens that creates background blur, so if you asked the same question about Canon, Sony, or Pentax DSLRs, and they used their version of the 18-55mm kit lens, the answer about background blur would still be the same.
The point I'm making is the limitation of the background blur is the 18-55mm kit lens, not what brand or model of camera it is attached to.
To get good background blur, it takes a combination of a longer focal length and a larger aperture, which means you need to purchase a lens more conducive to portraiture.