Paraphrasing in other words what they have mentioned in several occasions (for example on JenSense [jensense.com] and on emails to publishers), there should be a clearly visible distinction between the ads and nearby page content (images, text, etc.), since the page content is not served by Google and the advertisers.
It's different in the case of the experimental [jensense.com] image+text ad units [problogger.net] that both Google and Yahoo have been testing (in the case of Yahoo, on the CNN [us.cnn.com] US Edition for over a year now), given that for those units they can select and serve suitable images, not confusing for users. It seems clear that this new kind of image+text ad unit (a mix of the old image ads and text ads) reduces ad blindness and increases ad reading, keeping conversions if done properly, that is without confusing users about the specific topic of the ad.
On the required distinction between ads and content, see for example Google's search result pages. The ads are blended with a style similar to search results, but there is a clear differentiation: border and space for the ads on the right, and a different background color for the ads on the top.
Of course, as all of us know, in addition to that distinction, undue attention from texts like "click here" or images of arrows, etc., are excluded in all cases.
Normal site text and images are a different matter. They have said on the official AdSense blog [adsense.blogspot.com]:
As AdSenseAdvisor [webmasterworld.com] said on this forum, when in doubt on a specific design, we should ask AdSense Support directly.
[edited by: Juan_G at 9:09 pm (utc) on Dec. 20, 2006]