Color shading has nothing to do with grout width. It all has to do with the expertise of the installer. 1/8 or larger should have unsanded grout.

To establish the minimum grout width, measure several of your tile. Whatever the variation, you need to multiply by three. Ex~ 1/8 variation would require 3/8 grout width, minimum.

Tile guy just explained that non sanded grout causes more color shading and also produces cracks. Is this accurate?

What variation do you mean we should measure? The thickness of the tile? Shouldn't it be the same thickness?
Greater than 1/8 in grout should be I sanded? I'd think the other way around, no?

No. By "Variations," I mean the overall SIZE of the tile. Cheaper tile will vary more.

When tile is "fired," they may start out with, let's say a tile that is 14" in size. After the firing process, you end up with meybe an 11 7/8" tile. They shrink. Quality Control is everything. Variations in composition of the tile, oven temperatures, cooling time, how many cigarette breaks while they're in the over, etc can affect the final size of the product.

Bottom line is that you generally get what you pay for. Would you expect the same quality from a $4/sq. ft. tile as you would from one at $.99 a foot?

The tiles we are using are marble.