What is better a higher ISO or lower?

I have the Nikon L120 and the ISO sensitivity options are AUTO, 80, 100, 200, 400, 800, 1600. What does ISO mean and what should i have it set on?

ISO is how sensitive the sensor is to light. A low ISO (80, 100) produces clearer images with less "noise", which is like grain for film. However, low ISO requires more light to make the exposure. If you are shooting in bright light, or using a tripod in dim light with still objects, then use a low ISO. The faster ISO is for low light or motion. High ISO will produce some noise, especially in a P&S camera with a small sensor. DSLR cameras in general handle high ISO much better.

The ISO is one element of the exposure triangle, the other two are shutter speed and aperture. Unfortunately, the L120 does not have manual modes, or even many "scene" modes. It is very much a P&S. Reviews indicate the its ISO performance above 200 is not too good. So keep the ISO as low as possible to capture the picture you're after. However, noise is better than blur. To know what ISO you need to use and when, you will need to understand a little about how exposure works.

Here is a link to learn about exposure:

http://www.cambridgeincolour.com/...posure.htm

And another to learn about composition:

http://asp.photo.free.fr/Composition/photoProgramCompClass01.shtml

Have fun and happy shooting!

Everything Ara said was pretty good, but I wanted to point out one thing:

ISO has nothing to do with the sensitivity of the sensor. That is fixed and not changeable. ISO effect signal gain (amplification) from the sensor. It works like an amplifier on a sound system. The more you turn it up, the louder it gets, but also the more distorted it gets.

ISO in terms of photography is a standard ating of how sensitive film (or the sensor in a digital camera) is to light.

The higher the number, the more sensitive to light the medium is.

Each doubling of the ISO rating equals one level of light so ISO 200 is one STOP OF LIGHT more than ISO 100 and ISO 400 is one stop of light more than ISO 200 (or two stops more than ISO 100).

One of the drawbacks of using a higher ISO film or using a higher ISO rating on a digital camera is either film grain or digital noise. The higher the rating, the noisier the image will be… How noisy varies based on the quality of the film or the quality of the sensor.

For example, my 5DMk II has about the same ammunt of noise at ISO 3200 as my Rebel T1i at ISO 800.

ISO is only one of 3 settings that controls how much light get's to your sensor. The other settings are aperture and shutter speed.

You typically want to have the lowest ISO you can get away with so as to avoid noise (or film grain) but sometimes, that's not possible because of the other two settings.

You might want to pick up a book called "Understanding Exposure" by Brian Peterson
http://www.amazon.com/...0817439390

Well worth the 10$ - 14$.

EDIT:
Tim is correct about ISO not being sensitivy but signal gain and all that techno mumbo jumbo but it's simpler to explain to someone with little to know photogrpahic knowledge by saying it makes the sensor more sensitive. We don;t want to driwn the preson in technical mumbo jumbo.

It's like explaining Depth of Field (DoF), you don;t start an in depth explanation of the physics optics, you simply fit a bit.