I agree the B+W version is better but I don't like the lack of sharpness in the people. Why did you want to blur them?
It seems to me that if you really wanted stationary people to be blurred, you would need a much, much longer exposure than your 1/8.
What I see is slightly blurred faces here and there, which is irritating to me because the blur is not constant and I am not sure why you would slightly blur the most interesting parts of your image.
Roger