This is from iMovie help:
"Different formats of footage, such as widescreen or high definition, potentially may not fit the format of your video well. For example, if you import widescreen footage into a standard definition project, the widescreen footage wouldn't fit well within the normal screen size of standard definition. iMovie HD automatically solves this problem by adjusting incoming footage to fit the screen size (aspect ratio) of your project."
I bet you created a standard def project. When you start a new imovie project you're prompted to choose the video format. Make sure you choose widescreen.
Chris