As you're finding out, the built-in flash on most cameras is too harsh for up-close pictures (it's optimized for targets about 5-7 feet away). What you need is lighting that's bright enough to not need flash, but more diffuse. This is why professional photo studios have those big white squares on adjustable stands, that they bounce lights off of in order to "fill in" any harsh shadows.
You can get a similar effect on the cheap with a "light tent", or in this case "light bucket". Get a cheap flimsy white plastic bucket from the hardware store. Turn it upside down. Cut a large arch out of one side of the bucket, so it looks kinda like a crude open-face helmet. Place a couple of bright lamps above and behind the bucket so they shine through the walls of the bucket and illuminate the interior with a directionless white light. Place your mini inside the bucket, and set up your tripod to shoot through the "arch". Make sure the camera sees only the bucket interior - don't get any of the lights "in frame" or your shot will wash out (if the camera has one of those lens hood things, use it).
For focus, make sure you're in "macro" mode. Shooting anything closer than about 3 feet or so usually requires macro. Look for a little stylized flower (apparently shooting close-ups of flowers is what NORMAL people use this for - but for the rest of us, it works well for minis...).