I'm not sure if we are thinking of the same thing, but try hitting P while in-game. IIRC that is the toggle for some pretty horrendous post-processing.
That's a menu option now, forget what it is called... definition or something. Anyway with it on it is just a blur filter really, covered up the jaggies and low res on consoles a bit.
As for the shadows, I don't remember a moving effect like you talk about cranky. I know the shadows are sort of "grainy" and it annoys some people, not me. If that is what you mean then there is a shadow mod that makes them solid and I think you even gain fps from using it. There are mods that effect the lighting and such too, if that's also part of your problem. GTA4 is definately an effects-heavy game but people have modded all that out for the small group it annoys.