Shooting with Natural Light

Wow...  That's actually a big complex question.
First of all, you have to know what to set your camera at.  You don't just pick settings.  Do you have a light meter?

You mentioned using the settings to get what you want.  What do you want?  Just good exposure?  You can use a grey card to get the right settings in the light you are shooting in.  Do you want to control your depth of field to blur the background and make your subject stand out.  You can do that in aperture priority mode which will let the camera pick the matching shutter speed.  Do you want specific lighting effects?  You should, good portrait lighting is available outdoors, check out Benji's latest post. 

Using flash outdoors is all about balancing ambient light with artificial light.  Are you trying to compensate for low light?  or trying to just get light in their eyes?

Reflectors are an art.  I mainly use them to lighten the shadow side, similar to a fill light. 

Is this what you are looking for?  I think practice is crucial when using outdoor light.  The scenario and lighting are always different.

Blurring the background - Narrow depth of field (or only one plane of the image being in focus) is caused by two things, either a large aperture opening (small f-stop number) or a long lens or both.  To get a good headshot with a blurred background go as far back as you can and zoom in.  You shoot with an SLR right?  You should see the effect through the lens.

Portrait vs. Snapshot - Key things to watch for are background, posing and lighting.  Snapshots have distracting elements in the background, bright spots of light, other people, cars, or just plain distracting and busy backgrounds.  Portraits generally have backgrounds that compliment the subject without taking any attention away.  Posing is refined in a portrait.  Watch the placement of awkward things like hands.  If you haven't already get a book on posing and learn the basics.  Studio posing and outdoor posing are slightly different because of the props, but the rules are the same.
Lighting in a portrait is of high quality.  You can either find good lighting and position your subject just right or manipulate the existing light with reflectors to either bounce light on the subject or subtract light by blocking it.  You can experiment with fill flash, but be aware it usually produces flat light unless you get it off camera with a cable or radio controlled flashes.

The biggest thing I have to focus on is making it about my subject and not the pretty backdrop.  I find a gorgeous area and try and incorporate the person, that's backwards and I am working on it.

Or better yet, shoot in the shade.  Seriously, open shade is the easiest to shoot in.  Just make sure your subject has plenty of light in their eyes.  Use a reflector or watch their position.

I like Mike's suggestion of the shooting them like they are wildlife.  Just make sure you are getting their best angles

Of course, that nice little scale is in multiple textbooks from my school days.

I tend toward larger apertures for headshots and closing it up for full lengths that incorporate the scenery all in the same lighting.  So there is some flexiblity there.

Mike posted it.  It means that if you are shooting in the bright sun to set your aperture at F16.  Open your aperture wider for shade, etc.  It's a pretty good guideline.  I wouldn't, however, suggest shooting portraits in the bright sun.  It can be done, but you are probably going to get better results shooting in open shade or in the early morning or late evening.

If you know your scales, it would be 100 ISO  1/125 @ F16
200 ISO 1/250 @F16
400 ISO 1/500 @F16

So, now that everyone knows it, hopefully we will not see blowouts right, wedding dresses, right, or how about background blowouts, right. We'll see.