I read a few forum posts on Woocommerce having blurry thumbnail images after I discovered the same problem. All seemed rather complicated so I ignored everything and looked at the issue myself.
1. Look at WooCommerce -> Settings -> Catalog – at the bottom of the page you’ll see that Product Thumbnails are 90 x 90.
2. The actual thumbnail area on the frontend is 118 x 118 so it’s stretching the thumbnail.
3. Set the Product Thumbnail to match the area 118 x 118.
Don’t forget you’ll need to regenerate your thumbnails.
Hope that helps!