I've gotten 2 shutterfly books and they are beautiful. If your images are blurry, then you are probably not uploading the right images. If you do a web sized image for showing to friends/forums/etc, then those images are way too small for shutterfly. You need to upload your full size images to have a good quality print. I made this mistake once, I was going to have them print out a brag book for me and I uploaded all my low resolution jpg's instead of my high res original files.
After making your pages (make them 12x12 for 12x12 books), save your original file and then use save as to save it as a .jpg as well. Don't lose your original work! You may find your wrote your kid's birthdays wrong or something! BTDT too. Those 12x12 jpgs are the ones you want to upload to shutterfly. If you want an 8x8 book, I'd still create at 12x12 and then shrink to 8x8 and then save the jpg. Keep your original file at 12x12 in case you want a large print down the line.