Well of course the levels take place in a square area (which is often the middle part of a "wall") sitting in front of a background image. However you can zoom in very close as well as pan/tilt so ws lets you see more of the game, really - especially when elements are scattered around every corner of the play area. Being able to watch your entire contraptions at work from dramatic angles (instead of zooming out and/or moving around to follow the action) is a treat. The level I chose is certainly not the best to demonstrate this, but here's a comparison from a more interesting angle : more "useless" (I'd say "immersive") scenery on the left, more game elements on the right in widescreen.
1024x768
1280x800
Edit : point blank comparison. Just more stuff in sight.
1024x768
1280x800
I'll probably post a nice set of comparison screenies in the proper section one of these days.