For owner of iPhone 5 who is totally new to iOS, it might be alarming to see that many apps are running in a letter-box mode, with black bars on top and bottom of the screen as in the above Plants vs Zombies example app. This is more apparent if you have a white iPhone 5.
Older iPhone has a screen resolution of 320×480 and 640×960 for retina display. Before the release of iPhone 5, all iOS apps in the App Store are developed to take advantage of these resolution. iPhone 5 has a taller retina screen resolution at 640×1136, an extra 176 screen resolution. Apps are required to modify in order to take advantage of the taller screen. Apple runs older apps letter-box for seamless compatibility with older apps.
Most major apps have been modified to take advantage of the taller iPhone 5 screen. In general, games are slower to adopt the taller screen as it is more works compared with utilities, productivity and social networking apps.