I found this about the little guys:
"They are natural suspension feeders, filtering food from the water. Phytoplankton foods bring out lot's of color. They are very helpful in filtering aquarium water. They can withstand a wide temperature variation and they last indefinitely in the marine aquarium. Like other Sponges, the Ball Sponge feeds on bacteria and detritus that it filters from the moving water. This is why water movement is crucial to their survival. Sponges can usually tolerate changes in water temperature with no ill effect, but they may be sensitive to drastic changes in salinity."
I found the last sentence about salinity very interesting.
They need pristine water conditions also.
They say you know your take is in good condition if you have sponges.
It was also stated they should be in areas void of light but I have some both growing in the shade as well as the bright light (my pink, like yours, is in the bright light). Go figure?
Just give it some time I think it will puff back out soon.Mine did the same thing as yours is doing.
Also one more thing I found out, do not expose them to air it will kill them.