How to convert BLOB to string?

Direct conversion is not possible without using some UDF, but you can extract text using SUBSTRING function:

DECLARE VARIABLE c1 VARCHAR(32000);
SELECT SUBSTRING(blob1 FROM 1 FOR 32000) FROM t1 INTO c1;

Please note that maximum length for VARCHAR is 32767 bytes (which might be less characters in multi-byte character sets like UTF8).

Various database access layers also have ability to retrieve BLOB data as string. For example, in PHP you could use:

$row = ibase_fetch_assoc($qry, IBASE_TEXT);

This automatically converts all textual BLOBs to VARCHARs, so you don't need to fetch blobs writing specific PHP code.