See the screenshots. When an image is "small", its thumbnail is poorly displayed in all modes, list, thbumbnail, grid. Either shrinked or streched.
In attachement, please find screenshots and the original images I used
Proposed solution
The image should not exceed its real size.
If the full-with is not enough to 'fill' the grid or the justified grid, the image should be aligned center (vertical and horizontally) and assume no bgcolor (transparent) - presenting the theme bg color (in the case represented on the screenshots, should be white).
This will result in real size images instead of stretched images, with bad visual aspect.
Also, in the list view thumbnails, the images should not be compressed or suffer any kind of deformation.