iPhoto allows you to view slideshows in full screen mode, but some computers won't allow you to do this. If you're using an affected computer, iPhoto 5.0.2 or later will display a black border around the edges of the screen to improve slideshow performance.
If you would like to play a slideshow without the border, consider exporting the slideshow as a QuickTime movie. You can then view the resulting movie in QuickTime Player or another application that can play movies in full screen mode.