Your camera is actually a very nice camera.
That dial is the mode dial which changes settings of the camera to suit the subject your are shooting.
These modes are:
AutoThe camera does everything for you, you just point and shoot
PS(Anti Blur)Not sure but Anti Blur suggests either that it increases the ISO (sensitivity of the sensor) to give faster shutter speeds to reduce blur or that it uses some form of optical stabilsation. Check the manual for the real answer.
Natural LightGuessing that this just uses a colour temperature of around 5600K with Matrix metering to even out the exposure across the scene. In other words this mode might produce results that are close to what the human eye see's in terms of colour and overal exposure, but I'm guessing again. RTFM

Natural Light & with FlashAs above but it uses flash too
SP1Dunno. Might be that you can set your own shooting mode and save it as SP1 and SP2? Again, RTFM
SP2As above
PP=Program Mode. The camera sets the shutter speed and aperture but I think you can still change the ISO. The difference between this and full auto is that you can still have control over an external flash and can shoot in either RAW or JPEG, Auto only permits JPEG.
AA=Aperture Priority. Basically exposure in controlled by three things, aperture, shutter speed and ISO. Aperture controls the amount of light entering the camera via the lens. Shutter speed controls how long that light hits the sensor for and ISO controls how sensitive the sensor is to that light. In Aperture priority you decide what aperture you want to use for your shot and the camera will choose a shutter speed to match. Aperture Priority is probably the most important mode on a camera as it gives you the greatest creative control over your shots without delving into the 'scary' world of fully manual. The aperture you use should be largely determined by your subject for example a portrait of someone would normally be shot using a large aperture like f/4 as this will knock the background out of focus whereas a landscape might be shot at f/22 to maximise the amount of depth of field (the amount of the shot that is in focus front to back).
SS=Shutter Priority. This is similar to Aperture Priority except that this time you set the shutter speed and the camera chooses the aperture for you. This can be good if you need to use a particulary slow or fast shutter speed but to be honest the same can be done with Aperture Priority so a lot of people just don't use this mode much if at all.
MM=Manual. You set the shutter speed and the aperture using the light meter in the camera to tell you when you have the correct exposure. This is the most creative option to use as it gives you total freedom but for some people it's too slow or complicated. If you master it though, you'll rarely use any other setting.
Movie SP1/SP2 This is the mode you use to shoot your home pron movies.
PortraitThis mode will choose the best settings for portraits i.e. a large aperture.
LandscapeThis mode will choose the best settings for landscapes i.e. a small aperture.
SportThis will set a fast shutter speed.
NightDepends on exactly how this one works. Usually it just triggers the flash to be used and adjusts the colour balance if need be other times it just means a slow shutter speed.
FireworksThis will set a slow shutter speed with a large to medium size aperture.
SunsetThis will set a small aperture and probably use a warm colour balance and might use some exposure compensation.
SnowThis will set the colour balance to cool, something like 4500K probably, but it will more importantly dial in 1-2 stops of exposure compensation.
BeachExactly the same as snow but it will use a warm colour temperature
MuseumUsually means it disables the flash and sets a high ISO to compensate.
PartyNot sure to be honest. I'd guess that it uses the flash and a high ISO
FlowerThis is a kind of Macro mode, where the camera will focus at a short distance yet use a smallish aperture as depth of field changes when the subject is close to the lens. Might also use a higher ISO.
TextNot too sure, would think it's similar to Flower though
HTH