The aspect ratio question has been talked about often in the past. Below are the most common AR's, with 1.33, 1.78, 1.85, and 2.35, being the ones you will most likely be using. I assume you are using a 16:9 projector and a 16:9 screen.
So, if the movie you are watching is 2.35 (look on the back of the dvd cover) you will get black bars top/bottom. The only way around this is to zoom the image larger than your screen, use one of the newer projectors with automatic scaling, or use an anamorphic lens in combination with a scaler.
If your DVD is 1.85 (very common also) or if your watching HDTV, the AR's are very close and you should not have any black bars on the top and bottom.
1.33 material will have black bars on the sides.