lol yeah the guppies will produce fry - unless they die whilst your tank is cycling - you will soon be overrun with the bu&&ers!!
What is happening in your tank at the moment though is a bacterial bloom.
What annoys me though is fish shops will happily sell fish to anyone without first obtaining some details from the customer. I'm not blaming you at all, but I find it unnecessarily cruel to introduce fish whilst the ammonia spike is dangerously high (in effect they burn!). If your local aquarium had just taken the time to find out how long your tank had been set up, they could have saved you the stress of seeing your fish going belly up over the next few weeks. Instead they'll rub their hands with greed when you next go back to replace the one's that have died.
Another link here which should explain it more for you.
http://www.cichlid-forum.com/articles/fishless _cycling.php