To blend or contrast that is the question!! Based on what I have read from a few blogs, there are mixed recommendations on whether to blend your ads with the content on your site or to contrast it. By blending, you make your ads seem like they are part of the content while contrasting makes them stand out. Its hard to say which method works and probably depends a lot on how your content is structured. 

Dinesh.com is primarily a blog and information site and most of my users spend time reading something and I have found that the blending method works best over the contrast method. This is probably because when someone is reading something they typically do not want to get distracted from what they are reading. I have managed to use the blend technique in the following way.

• Blend Background, Text and Hyperlink Colors - My website uses black text, black hyperlinks and white backgrounds and so I have made my ads use the same color scheme. I have met with some success in leaving the hyperlinks in blue and thats something you can experiment with on your site.
• Blend the fonts (family and size) - In order to give a seamless experience, its important to blend the fonts of your site and Adsense to give that seamless experience. Adsense currently supports Times, Verdana and Arial. I find Verdana the best for my type of Blog website and I have gone ahead and used the same font family and font size for my ads as well as my blog.
  
• Blend the reading layout - Most websites have left and right navigations/sections that read from top to bottom and the main content pane that reads left to right. I have tried to keep my ads to follow the same reading pattern. With most Google Ads getting the left to right is rather difficult because their ads formats run top to bottom. The new 728 x 90 format released in July 2010 somewhat achieves the left to right and I have seen good increase in click-through rates. 
• Blend close to main reading content - The closer/deeply integrated the ad with your content, I think you have a better shot of improving CTR.
  

Blending ads with your content is not against the policies of Google Adsense, unless you do something that Google prohibits. As usual, I recommend making the change and seeing the results 1-week before and after the change to determine the impact.

Happy Tuning.