I have owned a Nikon D70s for a year now and it has been a great camera. Unforunately, I do find that when using the built in flash, it tends to make the pictures look overexposed and too white. It looks like you were using your flash, which you don’t necessarily want.
I notice this is especially bad when there are people in the photo.
I have found a few things to tone this down considerably and make your photos look normal again. All these settings cannot be changed in the “automatic modes”. You need to be in the manul or priority modes.
Set Your White Balance
I don’t know why, but the D70s doesn’t want to set the white balance to “Flash” when it actually uses the flash. Try it. Take a photo with white balance set to automatic and the flash up and then manually set your white balance to flash (the little lightning bolt) and take another photo. The colors will be drastically different.
Note: If you shoot in RAW mode, white balance doesn’t really matter. You can adjust this on your computer at home with no loss in quality. It is annoying and time consuming though.
Turn Down Your Exposure Level
Turn down your exposure level by a third. This is the little +/- button near your shutter button. Hold it down and use your sub-command wheel to adjust it down by a third. This will underexpose your photo slightly and tone down those bright spots caused by your flash.
Turn Down Your Flash Level
On the left side of your camera just down from your flash is the little lightning bolt sign on a button (the one that pops up your flash in the manual modes). When you are in the custom modes you can hold down this button and use your primary command wheel to adjust the flash level. I will turn it down by two thirds usually to tone down the brightness of the flash.