I've been playing Minecraft for a few years on the same computer and suddenly the graphics have gone bad. I thought it was the 1.5 update and my crappy graphics card wasn't supported anymore but then I tried voltz (1.4.7) and it is exactly the same. Here is an example:
My graphics card, like I said, is very old (Intel 82945g). But it has been running perfectly for ages. I've attempted installing a new texture pack (sphax 32x32) but this didn't help. It's not really the blocks that are the problem, just the items.
The texture pack shown is just the default Minecraft.