Here's the updated fiddle:
http://jsfiddle.net/graphicsxp/fcQZk/8/
I've added a controller, which is assigned to the dialog options and also to the directive's controller.
Now, I still can't get a reference to the dialog when I click on the close button. I'm soooooo in need of some help.
Please can anyone have a look at the fiddle and help getting this to work ?