No, actually there should be a "Color LCD" option, if the iBook contains similar color profiles to my PowerBook. "Generic RGB" looks reeeeeealy bad on my PowerBook.
Don't know what could be wrong with the colors shifting around, although some time back my old G3, hooked up to a Samsung CRT, lost its calibrated profile and went to a generic one for no explainable reason (the calibrated profile vanished, never to return, hehe).