Slipes got it right -
The changing of the ISO rating is the same effect and result that you would get by changing your film type in cameras.
The ratings are closely equivelant to the old film standards. Generally speaking, in a DSLR, you can shoot at higher ISO ratings to help get your shutter speeds within acceptable ranges for your subject. At higher ISO, you do get more noise (grain), however in post production this can be neutralized to a great degree.
In Point & shoot cameras, the noise is much more noticeable above ISO 100. This is part of the trade off for getting "sharper" shots in a P&S.
Of course theres more to it than that - but thats for other threads to discuss.
Good Shooting - Jon F