Wrote a blur shader for use in glow effects so thought I might as well use it to blur the game when it is paused. The effect blurs in and out by setting a shader variable between 0 and 1 so you get a nice, smooth transition as the menu appears and disappears.
Squishy is not a good swimmer - you can't move up and down without using your arms to pull yourself about in the water. Works quite nicely really.
I'm not sure if any other post processing will be needed for this project, but I do plan to experiment extensively with pixel shaders for rendering effects within the game.