I am a new user of a Canon XSI using the 18-55mm lense that came with the camera. I noticed that when taking pictures of a group that not all of the faces are sharp (some are out of focus). I am using the automatic mode. If I set it to aperature priority - how small do I need to set the aperature to have a clear shot of everyone. Should I be using a different mode or do I have the wrong lense? I'm lost. Please advise.
You don't have the wrong lens. Assuming the problem is not camera shake due to slow shutter speeds, it's a matter of depth of field. The wider the aperture, the fewer objects that will be in sharp focus between the foreground and the background. In automatic mode, the camera doesn't care about that, only about light conditions, and it will open the aperture to compensate for lower light. If you use aperture mode and set the aperture somewhere in the range of f/11 to f/16, your groups faces should all be in reasonably sharp focus.
But this brings up the next concern: Shutter speed. Without flash, shutter speed will be slower as aperture becomes smaller. again, it's a matter of compensating for the light, except in this case the camera isn't doing it - you are. Flash does help, but even with flash the shutter speed might be to slow to shoot handheld without a camera shake problem. This is why they still make and sell tripods. Personally, I don't like to shoot handheld at speeds much below 1/250 second. But, I'm an old guy and probably shake more, anyway.
It's a bit of a learning curve, but it's one you can relax and have fun with....