Hey Khurt! Great job! Incidentally, I'm also in the process of doing some portraits. Every year around this time, we shoot the boys for our (ahem) Holiday card. As they get older, it is more like herding cats. Had I known you were looking for a good portrait lens, I would have loaned you my 50mm f/1.4 (non-G) lens. It's pretty old school but works great. With the DX 1.5x crop, it works out to be 75mm, which is a great portrait length.

If you are looking for cheap lights, go to the nearest Home Depot or Lowes. They offer these light sockets (with cords) that have a spring clamp and an aluminum reflector. Buy a couple of those an a couple of 100W daylight balanced bulbs. They're inexpensive and they work great. I position them all around to help light up a room and to direct light to open up shadows. A lot of times you can use them to bounce light off the ceiling. Just be aware that your ceilings have to be white if you do that. If they are painted any other color, you will get a color cast if you bounce. If direct light is too harsh (which it can be), you can put a white sheet in front of the lights (but far enough away that you don't catch them on fire!) to create your own soft box. You can also try bouncing the light off the sheet as well. Just be aware that you need quite a bit of light especially if you're bouncing it.

You can also get a couple of pieces of white poster board from Staples/OfficeMax and use that as a reflector. In the case of your setup shot, you would put the reflector to the left (as you're looking through your camera's viewfinder). Catch the natural sunlight as it comes in the window and bounce it back onto the left side of Bhavana (again, as you're looking through your camera's viewfinder). In my opinion, you still need flash to provide that pop of light in her eyes. If you are able to raise the amount of ambient light in the room, you won't need your flash to be the primary light in your photo which can cast harsh shadows (yuck).

Great job for your first go at it!

-Johnny