The Netflix for iPad application allows you to stream your Netflix multimedia to your iPad in a Wi-Fi connected area or when connected to a 3G or 4G cellular-phone network. As Netflix can use quite a lot of bandwidth, the fastest connection you can get is over Wi-Fi. You cannot use Netflix over a 2G network due to the needed bandwidth to watch a TV show or a movie. Therefore, the only reason that could cause a blurry or lagging video on your Netflix for iPad application is the connection speed. There are various steps you can take to ensure that you have the best quality video.
Check that you are connected to the proper Wi-Fi network. Open "Settings," then "Wi-Fi," and ensure that you are connected to your home network. If you are near a public network, then it might slow down.
Check your connectivity in the top left corner of the iPad. The Wi-Fi connectivity icon (which looks like a radar signal, or a baseball diamond with curved bars in it) shows what strength signal you have (the more bars that are dark, the better the signal). The data signal strength icon (a series of bars) shows the signal you have for your 3G or 4G network (the more bars, the better the signal). A less-than-full signal could make your movie blurry when you play it.
Check the overall network usage. Streaming video can take up a lot of bandwidth. If you have other computers on the network playing online games, downloading content or streaming multimedia, this can all contribute to a slower speed. Watch your iPad video again when fewer people are using the network.