Thank you for your question.
I think the problem is that the update would've reset the plugin to its default settings.
(Also changes in the new version's code may position the images slightly differently. For a more technical description see the P.S. below.)
The solution is:
- Login to the Admin area and go to Settings -> Header Slideshow
- Adjust the setting for height, e.g. increase that so that the images fit correctly.
You may find using the Firebug plugin for Firefox is helpful in determining the correct setting here.
N.B. Also you might need to logout of the Admin area and check the positioning without the WordPress Admin bar present.
Please feel free to contact me directly should you require further assistance.
P.S. Images are now output within a new div that is the first child of the outermost container div