The problem is you have to decide from the options you have...
* Leave it as it is and live with the blurry sprites, they'll probably look ok on a tablet anyway.
* Redraw your sprites so they are twice the resolution that they need to be - then the scaling and blurring will be much nicer. The problem is that there's nothing extra for the render to use to improve the look of sprites. If you use double resolution sprites, then rotating and scaling can avoid the uglies.
* Disable blurring - this is done per image, you set the MAG and MIN filter to 0... SetImageMinFilter(Img,0) and SetImageMagFilter(Img,0) - this will stop the blurring, but it will make sprites look jagged sometimes, assuming you aren't using double resolution images.
Really, the best option is to use sprites images that are bigger than you need them to be, typically double sized is the best bet to retain power-of-2 sizes. If you have a sprite that is 32x32 and displayed at 32x32, it will look horrible when displayed at 41x41, or 42x42 - you need more resolution in the sprite to stop the blurring. If you made that sprite 64x64 and displayed it at 32x32, then it would still blur, but it would be at a level that actually helps the appearance - like anti-alias, and especially with rotation - rotating with native resolution will always be ugly... at double res it'll look twelfty times better. You'd be able to rotate and scale the sprite however you want and it would look nice no matter what - unless you start trying to display it at >64 resolution of course.
Doing this will future-proof your game too - because you never know what device your game might end up running on - perhaps it's safer to aim at the Ipad3 resolution of 2560 wide.
Doubling up on sprite resolution (not size) should do the trick, I am sure you'd see an instant improvement.
I am the one who knocks...