So I have this little zone which I want to be lighted by dynamic light(s) based on vertex lighting but I have no idea how to do this. The standard lamp is just a ambient light if I understand it correctly.
I have searched these forums and tried to find tutorials on how to do this via google but found nothing that has helped me. So if you guys could help me in any way that would be greatly appreciated 
shameless bump. no one out there :s?
Sorry for such a late reply. I had this problem too. Took forever to figure out. But here it is.
Each face in a textured mesh needs to be told to use vertex lighting. To do this, select your object, go into edit mode with Tab. Hit A to select all faces. Now, in the edit button panel, there’s a tab called “texture face” (it’s ONLY visible during edit mode; keep that in mind). Enable the “light” button – this tells the active face to use vertex lighting. Then, click the “copy” button to apply this setting to all selected faces.
You’re not done yet. In the material panel, make sure that “texface” is also enabled.
Basically, you’re telling Blender not only to light each face, but also telling the material to honor those settings as well.
Cheers!