Thumbnails are appearing squashed

There is apparently an issue with thumbnails appearing squashed (see the youtube-1 attachment). It just started happening to me on one of my client's sites.

Here is a discussion that says that switching to the iframe code will resolve the issue:
http://www.google.com/support/forum/p/youtube/thread?tid=533aa77323b1b02...

I couldn't find the discussions the Google employee alluded to.

Here is the iframe API reference:
http://code.google.com/apis/youtube/iframe_api_reference.html

I can't find what triggers the thumbnail being squashed on my site. On one page it's fine and on another, showing the same video, it's not and the settings appear to be identical.