Your code is close. Since your are using the 'shiftbrite', ignore the PWM suggestions.
void loop() {
Command = B00;
SendPacket();
Blue = Blue - Fade; // same as Blue -= Fade;
if (Blue < 1 || Blue > 1023)
{
Blue += Fade; // Step back one
Fade = -Fade; // Reverse direction of fade
}
Fade = Fade + 5; // Increase rate of fade, decrease rate of brightening.
delay (10);
}