If you don't accept the limitations of your lens, you'll get a lot of serviceable but disappointing photos. The lights in this photo look soft and round because it's shot with a very expensive lens that has a wide, round aperture; without it, you wouldn't have the nice
bokeh that makes it marginally better than a snapshot of an ornament. Some newer point-and-shoot models have "defocus" modes that attempt to simulate this effect, with mixed results. If you reframe the shot a bit, say, with multiple ornaments in it, you can take advantage of the camera's "weakness" of having more of the shot in focus.
(Christmas 2008, 1/125 sec, f5.0, ISO 25600, AWB, spot metering, Canon EOS 5D Mark II, 24-70mm f2.8L lens at f3.2)