For a nice, blurred background – use a wide aperture
Your aperture setting controls the amount of light you let through the lens, but it also controls what’s called “depth of field.” Depth of field determines how much of your image is in focus. Smaller apertures let in less light, but keep your picture sharper. Wider apertures let in a lot more light, but its important to select what you want in focus because the rest will be blurry. This is a great way of separating your subject from the background. Or for something different – put your subject in the background and focus on something in the foreground.
On your camera – choose the aperture priority setting. Depending on your model, this is A, AV or AP. Then use the selection dial to select a lower number. The lower the number, the more blur you’ll have in the out of focus areas in your picture. On a point and shoot camera try anything from 2.8 to 5.6. On an SRL camera try 1.4 or whatever your lens goes all the way down to.
Experiment and have fun!