The link below clarifies that it is a Kindle specific issue and it has nothing to do with the third-party software such as Calibre. According to the link, "on the Kindle, the only image that will use the whole screen is the cover. All of the other images in your content will have a stupid-looking border around them and there's nothing you can do about it."
Is there any way to let the Amazon Kindle developers know about this issue?
207-171-168-158.amazon.com/kdpforums/thread.jspa?threadID=14694