When the images are shown grouped in the activity stream and the first one (I have not tried uploading only small ones to see what happens) the first one is shown in the center of a grey background, when the image is big enough it shows good filling all the space. Check this image, I tried this in your demo site.
I think that can be fixed making automatic zoom for smaller images filling the background space. Like this:
Or placing the image with a background of the same size and sticked to the botton above the other images. Like this:
I tried to modify the css using firebug but couldnt find a solution for this displaying "error". What do you think about this? Thanks!