The built-in flash on many Canon DSLRs is generally considered inadequate for most serious purposes (and the Canon pro bodies do not include a flash). The Canon accessory flashes such as the 420EX are much more versatile and powerful. The 420EX gets the light far above the lens (prevents half-moon shadows in your pictures) and does a much better job preventing the red-eye effect.
The Canon Speedlite 420EX Flash allows bouncing the flash off of a standard height ceiling or off of other reflectors such as white walls, white foamcore, Photoflex and other commercial reflectors, ... The 420EX also allows the use of light softening and modifying accessories such as the Lumiquest Big Bounce, the Lumiquest Softbox, and the Sto-Fen Omnibounce - or even a Chimera Softbox. These techniques can make a huge difference in your image quality.
Another benefit of Canon's accessory flashes is that they significantly help focusing on many EOS cameras. The pattern of the focus assist light projected by the flash helps the camera focus faster and more accurately - even on a low contrast surface such as a white wall. The focus assist feature can make or break a shot in low light situations.
The Canon Speedlite 420EX Flash fits between the little Canon 220ex Flash and the larger and more powerful Canon 550EX E-TTL Speedlite Flash and the Canon Speedlite 580EX E-TTL II Flash. The 420EX is a very good value for general purpose use. It is relatively small.
Although not as powerful as the larger and more costly flashes, the 420EX is quite powerful.
Canon EOS 300D Digital Rebel owners should consider the Canon 550EX Flash or the even better Canon 580EX Flash as they offer FEC (Flash Exposure Compensation) not found on the 420EX. Most other Canon DSLR cameras offer FEC on the camera. For these users, the Canon Speedlite 420EX Flash may be a great value choice. The 550EX and 580EX also offer a manual flash mode that is not included on the 420EX.s
Another feature of the 420EX is that it can be used as a wirelessly (via light) triggered remote flash when slaved to a Canon 550EX Flash, the Canon 580EX Flash or to a Canon ST-E2. Many people choose to start with the 420EX as their first flash. As they progress in their abilities, they buy the Canon 550EX Flash or the Canon 580EX Flash and keep the Canon Speedlite 420EX Flash as a second flash. The Canon 420EX then gets used for general purpose portability and as a Slave Flash for the situations that call for more than 1 flash.
I want to stress the importance of learning how to use Canon's E-TTL Flash system. The PhotoNotes link in my "More Information" section below will get you well on your way to great flash photography results.
The Canon Speedlite 420EX Flash is a compact flash that is capable of putting out a lot of directable light. It is all the flash that many casual photographers need.