So I checked with AC to confirm what I remembered, to prevent distortion, you need to crop the photos to 1X1 proportions (e.g 100x100, 200x200, 300x300) pixels.
There are several free imaging editing tools out there, including some that are web based. we use Gimp, but I have also used Paint.NET.
From AC, the best results are apparently saving the file as .jpg (JPEG)
