Noise lives in the dark parts of our photographs. All those little random dots of color which appear in parts of your images are just random data, when the camera sensor doesn’t have enough information to capture a picture.
This last weekend I got to visit my folks and attend an unusual reunion. All the classes from 1970-1979 gathered in OK, for a big party. Because I took my “real” camera, I wound up as the photographer for many of the events. It was a blast. One of the things which really distinguished McAlester during this period was an incredible choir, music and theater program—No I did not sing. The organizers arranged for the choir director to come back and for volunteers to perform at one of the many large churches on Sunday morning.
For some reason, churches really object to shooting with big booming flash units, so I knew I needed to plan for shooting, hand held with a long lens in low light. So, today we are going to talk about strategies and tools to help, both in shooting and in post processing.
First, let’s talk about your ability to adjust your ISO settings. ISO is how the camera’s sensitivity to light is measured. All camera’s have optimal settings where the sensor has the lowest noise profile. For my D300®, that is at ISO 200. It is the same thing as the film speed. A lower number meant that you needed more light, but that the pictures were sharper. With a digital camera you can change the sensitivity on the fly. Many camera’s have auto-ISO settings. I prefer to adjust mine manually. When shooting indoors, my camera is good up to around ISO 800. The noise there is visible, but manageable. Above ISO 1000, it looks very grainy. The newest Nikon cameras have really broken through with new sensors and they can be used at settings of ISO 3200 or greater. How much greater? All the way up to ISO 102,400, this is almost like shooting at midnight.
So what is the impact on your pictures? Less light means your shutter has to stay open longer at a given fstop. If you are shooting things that don’t move and are on a tripod, that might be ok, but trying to shoot people moving, well it means that they will be fuzzy at best and uselessly blurry at worst. Fast glass, i.e., f2.8 and better really helps, but that kind of lens get pricey quickly. Even at ISO 800, I the picture was shot at 1/10 of a second, really too slow to handhold. 
Lightroom 3.x has dramatically improved our ability to get cleaner images. Nothing yet, although there are algorithms in development, can correct an out of focus picture. There are still plug-ins available that do this as well, but in the new release of LR, they added a new Noise Reduction module just below the sharpening module.
It has two different sets of sliders, one for Luminance noise—random flecks and the second for Color noise—the banding which can appear around objects.
From the Adobe Community Lightroom Help Pages at http://help.adobe.com/en_US/Lightroom/3.0/Using/WS67a9e0c3a11b149632d4213d12864349b1a-7fff.html
Luminance
Reduces luminance noise.
Detail
Controls the luminance noise threshold. Useful for very noisy photos. Higher values preserve more detail but may produce noisier results. Lower values produce cleaner results but may also remove some detail.
Contrast
Controls luminance contrast. Useful for very noisy photos. Higher values preserve contrast but may produce noisy blotches or mottling. Lower values produce smoother results but may also have less contrast.
Color
Reduces color noise.
Detail
Controls the color noise threshold. Higher values protect thin, detailed color edges but may result in color speckling. Lower values remove color speckles but may result in color bleeding.
There are no right answers to the settings, play with them with the image at 100% until it looks right. It makes a difference as can be seen from these two segments of the image above. The first has no noise reduction applied:
The same image with NR cranked up to 89 (Yes it goes past 11). Edges are much crisper. 