For now you can simply pinch-zoom the images to stretch them and get the same result as the previous release. We are adding a settings option in the 2.0 release which will allow you to control the default behaviour. In this way you can decide if you prefer the native resolution (which makes the video look crisper, yet often smaller) or the stretched images that will always fill the screen.
We were hoping to add the toggle switch at the same time as we introduced this feature but we ran out of time to submit the app to Apple before the holiday shutdown. Version 2.0 will complete the feature and hopefully offer some additional goodies!
UPDATE - Due to overwhelming response we have reversed this change and released a patch to Apple. The Live Cams HD release is v1.91 and the Live Cams release is v4.91
We will re-introduce the feature in the next major release along with the toggle option to turn it on or off.