The thumbnail size of the native Video app is fixed.
If the movies are non-iTunes one's, a different video player might help, but if they were bought through iTunes, there is little one can do.
On second thought, it should be possible to adjust the size slightly by either downsizing the thumbnail in iTunes, or removing it completely. Not sure how useful that would be though.
But you should be able to remove the image, flag the movie as a Music Video, that way it would just show the start of the video as a thumbnail, while also showing the movie name. And the overall size would be slightly smaller.