The main problem is the shallow depth of field, I notice you had the lens set to F2.8 the lens has focused on the bag of treats, notice how sharp the picture is around the 'Ge' or Gerbil.
Not being a Nikon user (and could be talking a load of old cod anyway)i'm not sure how it works but on my canon if I have the camera set to aperture priority the flash works as a fill flash. Try setting it to manual F4 and 1/60 shutter speed I think the nikons ttl flash metering is really good and should set the flash to just the right level or try 'P' mode
Hope this helps Scott