Think of it this way:
F stop - how much light is let in from that available
Shutter speed - how long the light is let into the camera
ISO - how sensitive the sensor is to the light coming into the camera
Those three will control the various aspects of the image you see once you press the shutter button.
F stop will influence the depth of field (how much of the image from front to back is in focus) and sharpness to a large degree
Shutter Speed will impact how SHARP the image is - most folks can't hand hold at <1/60th without significant blurring for example -
ISO will impact how grainy the image looks. Lower ISO numbers mean more smooth images while higher ISO means more sensitivity but also more graininess to pictures (potentially but in reality almost always)
All can be varied in M mode and Auto control much of this for you. Basically, sunny day, good light, ISO 100-200 for everything outside. Inside taking shots of a kids basketball game under mediocre lights may mean using ISO 800-3200 to get shots that stop the action.
I was always taught to decrease the f-stop first to increase the shutter speed and only if that was not enough to then increase the ISO. Getting a sharp image is the first goal, if its sharp you can clean up a lot of noise (graniness) with post-processing I'm learning.
Hope that helps a bit. CNET has a video that takes a stab at ISO as well:
Please Explain: ISO - Digital Cameras