zaren: as for converting to b&w and upping the contrast, would that be done as part of post-processing using s/w like photoshop? or you meant upping the contrast at the point the picture was snapped? also, as i don't have a flash, could i use the built-in flash to fill-in, or would that be even worse?
gavinting: bigger DOF as in, use smaller aperture? f2.8 is the biggest my lens can provide. any smaller and it'd be utterly underexposed... =( i didn't want to up the ISO any more because ISO already at 400. should i try ISO 800 next time?
i think here's a classic example of subjects against a bright background. i.e. you need to ''light up'' the people either by filling in with a flash or overexpose the background to get them in better exposure if you choose not to use a flash.
anyway, i think you should use spot metering to meter your subjects so that the picture exposes for your subjects instead of the bright background.
keep your aperture slightly smaller as f2.8 might be giving you too thin a DOF.
if there's insufficient shutter speed to cancel your hand movement, up the iso.
if you think the iso is already too high and the picture will get too grainy, use a flash.
when using a flash, you should still keep a setting that exposes the background reasonably to prevent a ''black hole'' in the background.
if you have an external flash unit, as this seems to be indoors, try to bounce the light off the ceiling (if it's not too high) or nearby walls to give you a better 3 dimensional lighting
if you don't have an external flash unit, and thinks your pop-up flash is giving you a harsh light, bring along a translucent piece of paper that can be fixed onto your pop-up flash easily to soften the light.