Version 0.3-2 is now in extras-testing. This version implements the following:

EXIF-based photo rotation. As qole says, photos with the orientation tag set in EXIF will now show properly rotated in the widget.

UI Improvements. The frame is now transparent (everyone was right, it does look better). Slide show controls have been moved to the left/right centre, and now a press anywhere along the left/right edge of the widget will activate the control. The photo displays a little larger (because of border removal). Probably a couple other minor things.