http://www.google.com/ig/directory?url=http://www.google.com/ig/modules/newsbar.xml

It comes preset with 'google' in the little [x] box. what would i put to just have news headlines?

That gadget's aim is to display search results. You could try to list: the, in, on and other very common words, but that's not a good solution.

Also you could add:
source:cnn
source:new_york_times
source:washington_post
source:slashdot

or your favorite news sources.