shiznatix:
What would I use a decoupling capacitor for in this situation?
When a chip turns on and off it creates noise on your power rails. The voltage in the parts of the circuit near the chip fluctuate. This is noise. If the noise is too great, then when a pin should read low it might read high instead, or vice versa.
The decoupling caps charge up when you place them in the circuit. Then when a dip in power starts to occur, they discharge a bit which raises the voltage back to where it should be.
Typically you put one or two small capacitors, say, 10uf and 0.1uF between an IC's VCC and GND pins as close to the IC as possible to prevent any noise from getting to it, or being generated by it.