If you don’t want your thumbnails to get distorted, you need to change WordPress 2.5′s default setting before you upload your photos into the media manager. Go to Settings > Miscellaneous and UNcheck the “Crop thumbnail to exact dimensions (normally thumbnails are proportional)” box.
I really can’t believe they have that box checked by default. It says right there: “normally thumbnails are proportional.” So why did they make the abnormal setting the default? It is to weep.
In other news, the discussion over the 2.5 Write screen continues.