Lumiquest (who are celebrating their 25th anniversary this month, by the way--see below) makes a useful diffuser called the Soft Screen.
Despite its limitations though, you have to love the convenience of having built-in flash. I shot this little saw whet owl at the Guilford Fair in Guilford, Connecticut this past September and it was pitch black out. From a distance of about three feet, however, I was able to get a perfectly exposed shot of him and, to be honest, I'm just fine with the lighting--it looks quite soft and clean. I'm not sure the shot would look much better if I'd been hauling my big Nikon Speedlight with me--and this was just a fun walk around the fair, so there is no way that I would have had it.
Many dSLR cameras (like my Nikon D90) also offer some nice flash modes to help you improve night and low-light shots. One of the options that I like best is a "slow sync" flash mode that lights the subject perfectly and then leaves the shutter open long enough to pick up some background lighting. Professionals call this technique "dragging" the shutter because the shutter speed drags on after the flash has fired; it's a nice technique for shooting portraits of friends at night where you want the background lighting to show--like on the sidewalk in Times Square. Nice that it's built into a lot of cameras these days. The Night Portrait mode built into most compact cameras does essentially the same thing.
By the way, this is my 499th posting with this blog, in a few days I'll post #500!
Happy Anniversary to Lumiquest: Lumiquest has been making light modifiers for direct flash for 25 years now. The company was started by Quest Couch (my favorite name in the photo industry) and Heidi Kenny and their first product, the original Pocket Bouncer, is one of the most popular flash modifiers ever made and I'd guess that there isn't a pro working in the world that doesn't have one in their camera bag. I first met Quest and Heidi while working for PDN (Photo District News) soon after they began the company and we've been friends ever since. To me Lumiquest is the quintessential model for turning a great idea into a great company: they saw a niche that needed filling and they created a product that turned into an instant bestseller. Today they make a whole line of great products for flash photography.