ikwak wrote:I checked out the photos I've taken at the maximum setting (2592 x 1994 px) using a Canon S50 powershot.
The result= grainy picture.
This is known as noise. In low light, using Auto ISO settings, the camera is boosting the ISO speed (which increases the sensitivity of the sensor to light by amplifying the signal). This amplification increases noise levels.
I did use AUTO setting and it was indoor ice skating rink with great lights.
What is "great lights" to the human eye, is actually very poor lighting to the camera. Even very well lit indoor arenas only have an EV (Exposure Value) of around 8. This is the way light is measured. Chances are, your indoor skating rink was not even this good.
Even if it was, a compact camera like yours will almost always need to use the flash indoors to prevent motion blur (from slower shutter speeds), or noise (if you try to increase ISO speeds).
In order to get shutter speeds fast enough to reduce motion blur (or to increase flash range), the camera must increase ISO speed.
If you want to keep noise levels down, you can shoot at lower ISO speeds (settable in your camera). However, you will need to make sure that you are within the stated flash range. Noise is worse in underexposed areas of a photo.
I'd probably set it to ISO 100. This will give you a flash range of 13.1 feet (4 meters) at full wide angle, dropping down as more zoom is used to 8.2 feet (2.5 meters) at full zoom.
If you need more range, each time you double the ISO speed, the flash range will increase by 1.4x (however you will have objectionable noise levels at higher ISO speeds).
To increase flash range, try to stay as close to wide angle as possible. More than twice as much light reaches the sensor through the lens at wide angle, versus full zoom with your model.
You can also get tools to help reduce the appearance of noise. Here are a few:
http://www.neatimage.com
http://www.picturecode.com
http://www.imagenomic.com (this one has a free version)