I found the problem and have two imperfect solutions. I opted for the second.
The width and height use the same settings as for your main product image, set in Admin->Configuration->Images.
However, the code ignores the "Use Proportional Images on Products and Categories" setting.
So, you can do one of two things:
- blank out either "Small image height" or "Small image width" in admin
- Edit a core file
The first option has the disadvantage of not letting you control the width and height of the images on the product landing pages.
The second option means you will have to merge files when upgrading. Here are instructions:
edit admin/includes/modules/product/preview_info.php, line 142.
Change:
echo zen_image(DIR_WS_CATALOG_IMAGES . $products_image_name, $pInfo->products_name, SMALL_IMAGE_WIDTH, SMALL_IMAGE_HEIGHT, 'align="right" hspace="5" vspace="5"') . $pInfo->products_description;
To this:
echo zen_image(DIR_WS_CATALOG_IMAGES . $products_image_name, $pInfo->products_name, SMALL_IMAGE_WIDTH, '', 'align="right" hspace="5" vspace="5"') . $pInfo->products_description;
This puts a blank value in the height requirement for zen_image, causing the image to not look stretched. It uses the width set in admin.
If anyone else, who has a better understanding of how zen_image() works, please feel free to pipe in on this.