Rig mesh deformation not as expected (Minecraft "Steve")

Hi, I’ve been trying to do a “steve” (Minecraft’s character) rig, but I can’t get the mesh deformation right, I wanted it to be something like this: http://youtu.be/oTMekSf5En0?t=20s (arms)
but this is how my object looks like: https://dl.dropboxusercontent.com/u/151460612/steveMesh.png , you see… it totally stretches the elbow part, I wanted it to make a perfect 90 degrees angle, but how can I make that? By the way this is going to be used for a game that will include animations and ragdolls: https://dl.dropboxusercontent.com/u/151460612/Steve.blend this is my file without any loop cuts you feel like editing the file to make it correct( I mean, the arms are just squares without aany additional vertices)

bump, apparently this also happens on my other models --’ I really need to know how to fix this