Camera shake is probably part of the problem.
I'd suggest that you spend some time experimenting with the camera under various lighting conditions. Then when it comes time to take snapshots you'll have an idea of what works.
In the settings, be sure you have the resolution to 2M and the quality to Fine or Super Fine. (This does make for bigger picture files, though.) You may want to bump some of the contrast and color settings under Advanced.
I've also had better luck setting the white balance manually rather than using Auto.
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