You cannot change the size of the album view thumbnails, or the image thumbnails (when they are laid out in rows of 3). They have been organized purposefully so that ample space is between each image (similar to a gallery) so that it maintains its high end look and feel. There is also room between the rows so that you can add 1-2 lines of title text beneath each album/thumbnail.
However, notice that if you click on any individual image, it opens up a beautiful expanded view of the image. This expanded view contains a slideshow feature, as well as Twitter/Facebook social sharing buttons. In the descriptive text field, you can add a text description, place paypal “buy now” buttons (in this way, the Photo Gallery can be used as a store), or your own custom HTML.
The size of your image in the expanded view window is determined by the actual size of your image. Therefore, if you would like your image to be larger, you will need to increase the actual size of the image you uploaded.