Stay away… Going really close to your friends will usually end up with them looking like they were lit by the light from an atom bomb's explosion. Stay at least 5-6 feet away from them to ensure that they retain that pearly complexion.
…but not too far away!** If you go too far away you'll end up seeing only the whites of their eyes, in spite of the flash. Most compact digital cameras have a tiny flash that can illuminate objects only at a maximum of 12-15 feet. Each camera is different, so experiment with yours to find the best distance to take pictures at, and maintain that distance.
Use red eye reduction mode.** It's true that image-editing programs have tools to remove red-eye from your photographs, but why bother when all you need to avoid it is to push a button?