Hello there - it depends on the conditions in which you are shooting. If you are shooting in low light, increase the ISO so you can increase your shutter speed to avoid camera shake. Be aware though that going too high on the ISO setting will introduce 'noise' into your images. If you are shooting in good light, keep your ISO as low as possible to produce the best possible image quality.
I would suggest you keep the ISO to AUTO for the time being and perhaps do some reading up on what effect ISO has on images. Once you understand the concept, experiment with different settings.
I adjust exposure manually and ISO has joined shutter and aperture to form the "holy trinity" of exposure settings.
When it's sunny out and there's light to spare and I want maximum IQ, I use 100. (Sometimes they call it "base" ISO - the slowest, most detailed, lowest noise setting on a camera.)
When it's overcast or in shade and I may need a bit of help getting adequate shutter, I use 200-400.
Other times, I adjust ISO interactively with shutter and aperture. When I do hand-held product shoots indoors and need a certain f/stop for depth and shutter to avoid camera shake, ISO is all I have left to work with. For web listing purposes I'll go up to 3200 if I have to. Still looks cleaner than ISO 200 film used to.
If you prefer auto shutter & aperture, you might just want to use auto ISO as well for starters.
I always use Aperture priority and set ISO manually according to the conditions. Most of my pictures go for publication in one form or another and so I need the best quality I can get.
Normally I work between ISO 100 and 400. 800 is quite acceptable and I do sometimes go as far as 1600, but rarely. My 5N gives good enough results for my needs at these settings. As has already been said, the lower the ISO the better the picture quality.
That said I have shot with the NEX up to 3200 and converted to black and white to get some really good, old fashioned film type effects. The NEX is first class at recreating that grainy "film" look.
I guess it comes down to what sort of picture effect you want. As someone suggested earlier in the thread, read up on the basics. One of the best moves you have made so far is to sign up to this forum, theres a lot of knowledge here, and a lot of people who are only too willing to help. Definitely one of the more "user friendly" forums!!!!
I've recommended a few times Bryan Peterson's "Understand Exposure" book to some of my friends, who just got an advanced camera. The basic knowledge will benefit one for a long time. Out of the three variables of aperture, shutter speed and ISO, you'd usually want to control two, and let camera pick the remaining one for a proper exposure.
My shooting mode is very similar to Rich. For available light shooting, I use Aperture Priority mode about 95% of the time. Basically I control aperture (for depth of field) and ISO, and let camera set the shutter speed. Reviewing whether the shutter speed is fast enough, I may adjust ISO.