The bluriness is the Enable Text Tab Glow option. It seems to have been turned on permanently with the latest update. (Even if the Enable Text Tab Glow check box is unchecked, the option remains on.)
For now, go into the options (right click tab, select ColorfulTabs -> Options), then on the General tab (you should already be on it), change the "Color of tab-label" (it's the last option on the bottom).