Frustrated

I am currently shooting with a Canon S30, previously used a Pentax ZX-7. I've been generally happy with the Canon, especially outdoors. However, this Christmas I shot a lot of my "in motion" 20 mo old granddaughter. If I was lucky enough to catch her sitting still, the flash overexposed her. If she was in motion(most of the time), the images were blurred. I made a slight adjustment in the flash using the Program mode. It helped a little with the overexposure problem. I'm considering buying a digital SLR(D20 or D70) so I can better capture these important shots. My questions: how can I better utilize the camera I have, or is it just not going to work for me? Is there a higher end P&S digital that will help with these issues, or should I just make the leap to the SLR? Thanks!

Donna, I had an S30 too, which I just passed along to my daughter. One of the major frustrations I had was the shutter lag. For a replacement I chose a Panasonic Lumix FZ20 (a 5 megapixel P&S that sells for around $500) mostly based on excellent reviews on the online review sites. (Google fz20 reviews) It's larger than the S30 but smaller than the SLRs and has a 12x optical zoom Leica lens.
I don't have too much experience with it yet but the shutter response is very much better than with the S30 and it has built in image stabilization that would help when handholding action shots. I'm sure that the SLRs would be an even better solution but I wanted to minimize the amount of gear I carry. There are a couple similar panasonic cameras with fewer pixels and lower prices.
-Just notice that the picture at the top of this page is a Lumix-