This might be a newbie question but I couldn't find it in past forums. Apologize if it was. I just bought a sb700 and use it with a d3100. I know that the flash and camera "talk" to each other. On auto setting my low light pics are still grainy. I noticed that the ISO was set to 800 automatically. Does the camera not realize that with the flash is doesn't need to be that high? Is the high ISO creating the grainy look? I was shooting with: camera set to auto w/flash, and flash set to TTL. Thank you in advance.
Auto ISO is generally bad news with flash.
Auto ISO makes Manual flash mode be absolutely impossible to use.
If we are using flash instead, we don't need high ISO. Auto ISO can be turned off. The camera still works.
There have been at least three recent methods of how Nikon Auto ISO works with flash, so camera models can act different. The following is speaking of Nikon Auto ISO, in dim places where flash is needed:
In any Nikon DSLR camera model, Auto ISO always remains at Minimum ISO (Auto ISO is not used) WHEN the hot shoe flash (recognized present) is in
Manual flash mode, or when using
Commander/Remote mode.
Otherwise ...
1. When a TTL flash is recognized as present on older Nikon DSLR models (D700, D90, and D300 and older), Auto ISO usually remains at Minimum ISO (regardless of the ambient, which might be dim, but which is why we are using flash instead). Auto ISO is increased only when the TTL flash limits out on power, and needs the help. Because, routinely, Auto ISO always only triggers at some extreme of whatever available limit exists.
2. But the newer models (D300S onward, D7000, D5100, etc.) begin in dim ambient by first increasing Auto ISO based on ambient, regardless if flash or not (intending to balance flash to the orange incandescent ambient?) So in dim places where flash is needed, the flash is always working into highest ISO. If you don't want high ISO, of course turn Auto ISO off with flash indoors. High ISO means that mixing flash with incandescent lights needs a CTO color filter (allowing Incandescent White Balance to be used), and the newer flashes provide a filter holder.
To determine how your camera model responds to Auto ISO with flash: If with Auto ISO, and if TTL flash is turned on in dim ambient, you see high or Maximum ISO value in the viewfinder, you have this newer version. If you always see Minimum ISO, you have the first version above.
3. The newest models (D800 and D600 and D7100) have changed the method yet again. Auto ISO still uses Maximum ISO with the internal TTL flash (the previous new way 2. above if in these dim places). But if external TTL flash (on hot shoe), Auto ISO is only increased to be two stops above Minimum (if in this dim ambient. Two stops is like ISO 100 to ISO 400, and 400 is very reasonable for bounce). Logic and reason finally won.
So when indoor flash always discovers that it is dealing with high ISO, we can of course simply turn Auto ISO off, and set the ISO we want. The camera will still work if Auto ISO is Off.

I admit that I am not a fan of Auto ISO, especially not with flash, but I understand many people choose to always leave it on. It may cause problems with flash.