My parents got me a Nikon SB-400 flash (read a good review) and I've taken some test photos. As you can see, bouncing the flash/tilting the flash head makes a huge difference. It softens features and eliminates ugly shadows behind the subjects. It also affects color balance. These photos are straight from the camera. The only modification has been resizing for the blog. Photos taken on a D40 with a 55-200 AF-S DX EG with VR set to off, on a tripod.

Flash straight on/0 degrees

Flash straight on/60 degrees

Bounce flash/75 degrees

Bounce flash/90 degrees
This test could have been made more accurate if a) I had compensated exposure (either in-camera or in post) to make all the photos have very similar histograms; and if b) I had color corrected to match. Yet because this is not what I am interested in seeing right now, it's not a big deal. The importance is the quality of light hitting the subjects, which is determined by the angle.
Allow me to introduce our talent. The hugging bears were given to us by my aunt Rosa for our wedding. To their left is Spike, a cactus that Melissa picked up when she
went to Tucson.