I occurs to me, after looking at several FPS and walk-through demos, that the perspective in very distorted. If you walk up to a box at a slight angle, the side becomes rather exaggerated. The same effect can be seen simply walking around in a room. Is there a trick to adjusting this?
yes there is a way, just select your camera and adjust the lens setting, here is a screenshot to help:
I tried that. I used settings from 20 to 150. Larger seems the direction to go, but still haven’t got it where I am satisfied.
I usually use 50, it seems to mirror human vision pretty well.
For 2d scroller games, and for an Isometric look, i wil tick the orthographic button.
This gets rid of the perspective…
Great for Diablo,Ultima online, NOX, Dungeon siege, SIM city, Command and conquer, Crusader, Leisure suit larry,Etc,
they all had to used rasterized tiles in the old days, so things up close had the same mesurements as things in the distance…
it is a bit more tricky to set up, because it somewhat ignores the cameras position.
I assign a hotkey to restart the game, then run both blender and blender player on seperate monitors…
Every time i tweak the camera settings, i re-load the blender player to make sure everything is looking the way I want it.
Hope that helps 
When you are in camera view [NumPad 0], you will see up to three “frames” around the view. The outside one is a solid black line, the two inner frames are dashed lines. The actual “ingame camera view” (that is, what is displayed if you run the game through the BlenderPlayer) is only what is inside of the two dashed lines. Zoom in on camera view until you can only see what is inside the dashed lines, then play the game. This should fix the distortion problem.
yeah, what he said 
For an FPS, I always use 15 for the lens. Any larger, and there is not enough perspective.