I can no longer scale images proportionately, it's like the bounding box is snapping to something in the vertical - resulting in distorted images.
Obviously I've hit some kind of shortcut but I can't figure out what it was - does anyone know what might be causing this?
You need to tell us how you are scaling. If you are using the Selction tool, though, you need to hold down both the Cmd or Ctrl key (depending on your platform) and the shift key. On windows you need to press the keys BEFORE you click the mouse.