I have the following harware:
- Canon 550
- Canon EF 50mm F1.4 lens
- Canon 580EX II
What is the optimal manual setting when shooting portraits?
It depends a great deal on your environment (lighting, background, and the like), goals (formal, casual, artistic, action, other), etc.
That said, I tend to like to shoot basic headshots at about f/4 or so -- that usually gives me sufficient depth of field to have the parts of the face in focus that I want to. Shutter speed generally just follows what the light is, then -- I almost always am shooting at ISO 100.
If using lighting I can control, I'll most likely try to match it to the f/4 scenario, and go with 1/125 or so for the shutter speed.
But again, it all depends a great deal... so...
Tell us more about what you're after? Even if the answer is "general starting point guidelines"?
If the flash is your only lightsource (i.e. you're not balancing flash with ambient light) then your shutter speed is largely irrelevant so I usually go one notch down (to account for any small delay in triggering the flash) from the sync speed (in your case that would mean 1/160)
Aperture depends on the look, f/5.6 or f/8 if you're very close or need everything in focus, anywhere down to f/1.8 if you want to blur parts of the image.
ISO to the lowest (or second lowest if your camera cheats on the lowest setting, so probably ISO200 for you) unless you run out of flash power, in which case up the ISO or reconsider the aperture.
If you are blending flash with other continuous sources of illumination then that's really another question, but this is a good starting point on the subject:
As @lindes says, "it depends", but... I like to shoot:
Since you will be using on-camera flash, try and bounce the flash off something (don't point it directly at the subject). Maybe a white wall to the side of the subject or even turn the head 180 degrees if there is a wall behind you to bounce off of. You will get a softer more flattering light.
If you bounce off a wall to the side, place a piece of white poster board (or something white/reflective) on the other side of the subject to fill in the shadow side.
Other than that, use AV mode (aperture priority) and play with it (advantage of digital). f/1.4 all the way up to f/11. This will affect the background's clarity and give some dramatic effects. Depending on your situation, f/1.4 may not even need the flash.