This isn't documented in the manual, but you can adjust the display aspect ratio (Full Screen, Fit, and Original) for any of the games in the collection with the exception of the Arch Rivals, Cyberball 2072, and the Mortal Kombat games.
Step 1. Start your favorite game.
Step 2. Press "Select" to pause.
Step 3. Tap Down+Square to cycle displays.
Step 4. Unpause.
Some versions of the disc also require players to hold the Left shoulder button and the circle button, in addition to tapping Down+Square.
Selecting the original "small" aspect ratio not only takes away the distortion caused by the full-screen "stretch," but it also eliminates many of the frame drops and slow-downs as well!