Thanks for all the kind comments. Her name is Kyla, named by my daughter.
She is very good with the stuffed toys and doesn't rip them up at all. She licks them and does play with them and we play fetch with her with them indoors but never tug-of-war. 
Mandy: I use an external Sigma 500 DG ST flash with a diffuser on it, bounced. I also use flash exposure compensation, taking several shots and adjusting the flash until the histogram looks good.
This was taken with the nifty fifty, although the kit lens works just fine indoors with a flash.
Thirdly this was shot in RAW, cropped and adjusted in CS2 (1 stop exposure boost). It looked fine on my crt monitor but seems to be almost overexposed on my wifes laptop. Oh well.
Unless you have a really fast lens, you are going to have to use an external flash indoors. I find that the on-camera is not that useful except for emergency situations where i don't have anything else.
Hope that this helps some.
I currently use an XTi.
