In the day's of film, ISO pertained to the film's sensitivity. It used to be that you would have to change a roll of film to get a different sensitivity.
So how do you know which ISO to choose for an image? Look at your content.
Noisy Image at ISO 3200 captured with Nikon D50
If you are shooting a fast moving subject in lower light levels, raise your ISO settings to a level you know will not have too much noise. You can find out what settings will not give you much noise with a test photo at each setting. This will afford you a faster shutter speed, and more depth of field with a smaller aperture. Up to about ISO 500 is pretty realistic for most cameras. If you are shooting full-frame next-generation cameras you can crank up to about 3200.
Image captured with Nikon D300 at ISO 100 with almost no noise
For nature or portrait work, go as LOW as possible. If you have ISO 50 or 100, use them! Lower ISO's provide a more saturated and noiseless image.
The best practice is to keep your ISO as low as you can, while still retaining the necessary shutter speed and depth of field for an image.
To determine ISO for any particular shot, determine first which shutter speed or aperture you MUST have. Set those, and then set your ISO high or low based on what you will need. If you can't achieve a relatively low ISO, but most have a high shutter speed, open your aperture a bit more.
ISO 100 once was the standard for professional and publishable work. Anything above that would become too noisy. The problem with ISO 100, is that you could only really capture well-lit images with fast shutter speeds, of a very bright scene. This made action photography far more difficult than today.
Most camera's now can shoot high quality, almost noise-free images at ISO 400. Some can even capture low-noise images at ISO 3200!
Image Captured with Nikon D300 at ISO 500, Noise is visible in sky
Digital technology is now pushing ISO to incredible levels. Photos can be captured at ISO's significantly higher than film cameras could achieve. Another huge advantage for digital is that photographer's can now change the ISO from shot to shot. Take advantage of how simple this adjustment is, and experiment with the different results.
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