Vertical photos get their heads cut off! Please help! :)

All video formats are wider than they are tall. Your portrait image files are too tall and would need "cropping", Ken Burns or made to "fit". This may add a black band on each side of the image or reduce the image height to make it fit the width of your video.
Read the Help files regarding Ken Burns.

Select the photo. Then open the Rotate, Crop, Ken Burns Tool. Choose FIT.

This will give you the full portrait with black bars to the side, but no ken burns.

If you want the ken burns effect on vertically oriented photos without cutting off the heads and feet, iMovie 11 will do this.

In iMovie 09, you can do this, but you must first add black space to your photos using an external photo editing application. I have found an Automator Action called Pad Images that will do this very quickly.
It is kind of complicated, so upgrade to iMovie 11 if you do a lot of this.