I want to express that an image is not sharp, meaning the focus is not set correct or there is smoke in front of the lens. Which would be more appropriate: "unsharp" or "blurred"?
"Blurred" seems to be much more common, according to Google ngram:
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If you are speaking about a focus problem to another photographer, unsharp is fine. Blurred or blurry can be used to describe more situations than just a focus problem. The camera could be focused properly, but the image could be blurred because it wasn't held steady. The subject of the image could be blurred if it was too fast for the exposure time of the camera, but the image would still be in focus.
However, unsharp is a somewhat technical term and not commonly used outside of photography/digital imaging (as far as I know), so if you were trying to describe the problem to someone in a more general way, you would want to say the image was blurry or out of focus.