TamraD, and other women here, would do well to read everything this woman has written here:
http://www.stumptuous.com/weights.html
She's done a lot of research on what it takes to get in shape and stay that way, and she has compiled a ton of information on one site. Her main focus is lifting with free weights, and she is really trying to lift the taboos of women as weight lifters. She dispells the myths (i.e. you'll "bulk up" and look manly) and knocks down almost every false weight loss product on the market, including Pilates.
There is no such thing as "long, lean muslces" vs. "bulky" muscles, as the Pilates folks will try to sell you. You don't need to lift 2lb weights because you're a woman! If you want serious results, you need to do a serious workout.
I'm in a similar position, I need to lose about 40 of my 220lb. I've dropped 10 already, and the main exercises I'm using to do it are running, rollerblading, and weight lifting (with big ol' iron weights).
Mike
PS: Look at her before and after pictures to see the awesome results of weight lifting on a woman.