oh, you can also (to soften the light) use your flash exposure bias to decrease the power the flash wil fire at in ttl.
and, you can put "modifiers" on the front of the flash.. i've got two icecream containers with plastic wrap over the front that i use for my "semi-hard" lighting
but there are off the shelf mini-softboxes too.
just google "diffuser dome" or "lightsphere" and you'll find a few different types ....so you can still use direct flash.. its just a matter of diffusing it a little by placing something over the flash