Just how blurred is it? You should expect DVI to give a noticeably sharper picture with an LCD monitor than VGA can, especially with a high resolution display, afterall that's the main point of using DVI.
When you've got an LCD hooked up via VGA you have the video card generating digital data, converting it to an analogue signal for sending over the cable, and the monitor converting it back to digital information again. There's inevitably some loss of fidelity in this process, though using a high quality VGA cable will help a little as Xevious mentions. With a DVI connection the signal remains digital throughout and so there is no blurring.
I have a Dell 2405FPW, and at one point I set it up with cloned inputs over VGA and DVI just to be able to switch between the two with the same image on the screen and see how much better DVI was. I was expecting a sharper image when I finally got the hardware to drive this monitor over DVI instead of VGA, and I was very pleased when I saw the difference
Basically this isn't a Dell issue, or an NVIDIA issue, it's a technology issue. VGA outputs were designed for CRTs whereas DVI outputs were designed for LCDs, VGA is always going to give a lower quality picture on an LCD.