Currently my CTR is 1% (traffic is about 50% referring sites, 50% search engines), is that a decent CTR, or should I be trying to improve CTR through changing ad placement/styling?
Go for 100%. The sky is the limit 1% is bad CTR but that depends on a lot of things. Move ads, change colors, size, etc. Try getting 3-4% at least. Then keep experimenting and see which works best.
You should aim for atleast 5%, do increase your CTR you need change the ad placements, position them in different placed, look at googles heat map it shows you the best positions to place the ads
As has been stated there are many factors that can have an effect on ctr but in my experience the one factor that has had the greatest bearing for me is the traffic source. For example, targeted search engine traffic tends to give a very good ctr while social traffic from somewhere like Myspace tends to be low. If you think your traffic sources could be a large part of the problem then it might be worth trying some affiliate offers instead to see if you might do better with those. It is generally understood that if you get a story to the front page of Digg that you will get a lot of traffic but that Adsense ctr will be low from that traffic. I have had experience of this and found this to be generally true but I also had an affiliate offer on the page and from this same traffic the offer converted surprisingly well. Maybe mixing it up a little might be worth trying.
I know that traffic source is a big factor, I mentioned that traffic was 50% search engine and 50% from other sites.