The bottom one. The top one looks better at first glance, but IMO not many things are worse than than resized pixel art. You could always adjust (i.e. speed up) the pace of your game slightly to adjust to the larger visible area.
What resolution were you building it in, and what's the correct one? Could you post some numbers?
Thanks for the input, nim. I'm not sure how I managed to jumble this up, but I accidentally started designing the game at 1/4 the size of my iMacs resolution, instead of 1/2 the iPhone 5 resolution. Below are the two methods I currently have been displaying it:
1920x1080 (480x270 running at 1/4 size)
Everything is a decent size on screen, but becomes distorted.
iPhone 5 Resolution:
1136x640 (568x320 running at 1/2 size)
Everything looks a bit too small, but displays properly.
I tried the iPhone 5 resolution at 1/4 and there wasn't nearly enough viewing space. Maybe I'm missing a fraction or some method I could use that would provide decent viewing space without too much distortion, but I can't think of anything.
I'll admit the distortion isn't always that noticeable when viewing it on the device, but if you're looking for it, it can stand out a bit.