Thank you for the suggestion but it doesn't seem to have any effect on the problem. I tried both books that I've converted from other sources, B&N books that I've converted, and the same books from B&N with absolutely nothing touched with publisher defaults both on and off.
I've had the NC since it was released and have been through all of the settings many times and I had never noticed or had any issue with hyphenation. There doesn't seem to be any option on the NC to adjust justification, this could have something to do with it.
As an example, I attached a screenshot from a book I bought from B&N with the publisher defaults set to on, so this is exactly the way it is meant to look with no fonts or margins adjusted. What I'd really like to know is if anyone else is seeing the same thing after the 1.2 update or it was always like this and I never noticed.