Have you tried changing the colour scheme around so it matches your site better? Maybe the same black background and white text? Might be worth a try. Otherwise your ads stand out like a sore thumb and detract away from your content. Might very well put off yoru visitors from staying too long too.
This is by far the biggest problem of the site. It is always important to blend your ads (background and link color should match the rest of the site).
I'd say the same thing, especially if you're going to use a black background. I would also consider changing your link color to match the "Ads by Google" white text. I don't recall if you can change the color of the google text or not (at setup). However, the white google text draws my eyes immediately.