Camera Shake and Overexposure
As well as overexposure, I believe there is some camera shake (look at the lighted windows to the left), which will tend to turn anything into a blob.
I'm guessing that in order to try and get enough light in for this mostly-dark scene, your camera slowed the shutter right down.
When the shutter is slowed down, any tiny movement of the camera can blur the image, as we see here.
Using a faster shutter speed, or steadying the camera with a tripod or similar would help.
The lights are being overexposed (almost certainly) because the camera is exposing for the scene as a whole. Most of the scene is very dark, so the camera thinks it needs to let in lots of light. This means that for the light areas, it lets in too much light, with the result that the neon sign gets blown out (especially the red channel - as @Matt Grum points out).
The fix for this is to dial the exposure down - probably using your "exposure compensation" control. Knowing when to do this will come quickly with experience. Fortunately, with digital you can always check on the back of the camera and reshoot if necessary. :)
Using your camera's spot metering mode would probably help, too, but it brings its own compromises. Check your manual for more details on this.