I totally agree with Sebastian's comment. Looks like the poster is using a 20D with a 17-85 lens; maybe the original post was modified.

I'm guessing that's not a real fast lens. Try a 50mm f1.8 at under $100USD. Very sharp and fast lens and important for low light work. It's probably at least two stops faster than what you have now.

Underexposed images that have been lightened in Photoshop look worse (and more noisy) to me than a properly exposed high-ISO shot. ISO1600 in that camera looks pretty good from what I've seen. If it's still a problem, you can look into Noise Ninja or other noise-reducing software that you'd apply in Photoshop.