Hey Bloke it could be the theme altering images I've seen this happen before.
Also another thing you can check are the thumbnail sizes you are using. Check both the store and media settings.
if that all checks out then I'd suspect the theme has something coded to alter thumbnails for it's use. Check if the theme has special settings of it's own for thumbnails.
Last if that all fails to find a resolution I'd disable non store related plugins and switch to a default wordpress theme such as 2010 or 2011 clear the store template cache in the store presentation settings and then check if you still have the same issue.
If it's resolved then it's due to the theme.