generally the audio 'speaks' and the video 'displays'
check the resolution settings on the video feed. If it is set at 320/480 then it will be blurry, even 720 will look blurry on some monitors. By default it will go to whatever the highest instant playback setting will run over your internet connection, but you can change that to whatever you want.
If you really think that flash player is at fault then uninstall it and go to adobe's website to re-install.