Building muscle actually is a good idea if you want to lose weight, or at least, if you want to lose fat. Muscle burns up calories quicker than normal flesh, so if you have more muscles, then the number of calories that you need to eat to maintain your current form per day increases, meaning it's easier to eat less calories than are necessary to maintain weight per day.
If you drink any soda... ever. Stop it. Now. Drink water, it's good for you, and it has zero calories. That said, try to reduce your sodium intake as well, salt helps to absorb water, so the more salt there is in your diet, the more water your body will maintain, which will increase bloating.
Daily exercise helps a lot as well. I'm really self conscious, so I can't go to the gym, but if you have the money to invest in some work out equipment for your home, whether its just a small set of weights, or a full out home gym, that will help a lot. This investment will help remind you that you're trying to lose weight, you'll probably be inclined to exercise more, and possibly even reminded to eat less when you get cravings (as we all do from time to time) to consume an entire tub of ice cream. And, with the daily exercise, it helps a lot if you do set up a routine, I exercise 20 minutes every morning, and 40 minutes every night about an hour or so before bed. And figure out something fun to do while you're exercising, If you want to chunk things into blocks that are divisible by 20 minutes, as I do, this can be very easy, because the average TV program, without commercials, is about 20 minutes long. I get shows that I like to watch on DVD and watch them while I exercise, jogging, doing sit ups, and weight lifting, etc... while I watch the TV.
And, of course, you won't instantly lose the weight, if you built muscle, you may actually gain weight, however, you will look thinner, which, ultimately is the goal, and if you do build the muscle, it'll be much easier to keep the weight off.