yes, external flash generally works better
For one thing, the flash is up high, out of line of sight of the subjects eyes, so red eye is reduced significantly. Another plus is the ability to bounce the flash against a wall or ceiling to soften the lighting for a more even exposure.
Second everything everyone's said.
Look into one that rotates up, to bounce off the ceiling -
One that rotates left or right, to bounce off the walls, OR to bounce off the ceiling when you're holding your camera vetical (you do that, right? :)
One that has a small, secondary "fill flash" built in so when you're bouncing the main light off something the small light shoots a little light straight ahead to fill in shadows under the eyes and nose, etc. This is my favorite flash scenario.
Have fun shopping!
Rick