I just take the plain little pill, but I have had the orange one before, and just chewed it up and swallowed it. If you take more than you need, you might wake up a little sleepy, but since it is a natural hormone, and not a drug, it is not addictive, and there are no side effects. I suggest starting with 3 mg, and take it about a half hour before you are going to go to bed, and you should start feeling drowsy by bedtime, but not drugged, just naturally sleepy. I have never had any problem with nightmares. I occasionally have a bad dream, but it is not like the melatonin causes me to have more of them, in fact, I usually sleep soundly.
It is also an anti-aging hormone, so you may have other benefits from taking it. There is a great book, called "the Melatonin Miracle", and it explains all about the health benefits in great detail.