it sounds like we have pretty similar hair...i dont have much success with curling irons either but my sister did my hair for my mom's wedding and curled it with my straightener and it came out sooo pretty, really loose, soft curls. here's a link to a video on how to do it:

http://www.youtube.com/watch?v=GfoihBOzP1I

Get a nice layered cut (maybe thinned a little), then use a curl-enhancing gel and a diffuser to make the most of your natural waves. This is what I do, and I get tons of compliments. I've tried many different gel brands, but the best is Clairol Herbal Essences Curl Scrunching Gel.

I have the same type of hair too. I once went to a salon to get it permed and it only lasted a week because my hair is so resistant! Anyway, I now use plain old velcro rollers. I lightly spray my dry hair with water and put the rollers in for a few hours. After I take the rollers out I rub my hands with a teeny tiny amount of paste and run them through my hair. Works like a charm!

Try layers and a good old set of hot rollers. I have very straight hard to curl hair of the same length and it works like a charm. I dry my hair put in the rollers for a half hour, take them out, flip over my head and run my fingers though my hair, add some hair spray and I'm set. Experiment with smaller rollers on the shorter layers and see what happens.

Use really strong conditioners and get your hair thinned out at a salon using a few careful layers. Maybe try a razoring technique. Once your hair is thinned out it will fall more to your liking. As far as curls that flat iron idea sounds good or old fashioned rollers are also great. I've also seen girls do the rag curls which is also sort of the same thing. Nothing will curl your hair better than old fashioned rollers that are left in to dry. The curls will stay in forever, three times nicer than a curling iron.