[Xaccers]

With creative compacts it can be difficult to get a sufficiently blurred background, so either move your subject (the thing you're taking a photo of) further away from the background, or blur the background later in something like photoshop

The smaller the number, the larger the aperture (yes, I know it doesn't make sense that small number = large aperture, but it's down to a formula) so the more blurred the background will be.
With the short lenses of a compact like yours though it is hard to do.
There may be a macro setting which would help.