Thanks for letting us know. We will add some instructions making sure to point out to set the size on the other tab.
Just a little information on this. When we pull images from Flickr, we try to match the size chosen (in the shortcode dialog) to the closest size that is available from Flickr (or other photo source). Because no size was picked in the shortcode, the smallest image size was likely the one being sent back from Flickr.