With iOS 7.1, Apple debuted a new toggle when you set a wallpaper (for the homescreen or lockscreen) on your iPhone or iPad called Perspective Zoom. What it basically does is keeps the animations but prevents the wallpaper from zooming-in on the homescreen/lockscreen.
The background zooms in a bit to give that feeling of depth – the parallax. Perspective Zoom has been added as an option that will control this parallax effect. Turning this off will remove the parallax animation (thus preventing the iOS to zoom the wallpaper.)
So now, if you don't want the iPhone to zoom in your perfect wallpaper and leave out details from the corners of the photo, you don't have to resort to the multiple workarounds that we've discussed. You don't have to install apps to fix the zooming problem. At least, that's how it looks for the moment.
To Disable/Control the Wallpaper Zoom:
Step #1. Open the Settings app.
Step #2. Tap on Wallpapers & Brightness.
Step #3. Tap on the screens under Choose Wallpaper.
Step #4. You should see the ‘Perspective Zoom' toggle. Tap to switch it OFF.
But this as such does not fix it all. You have to make sure Reduce Motion is switched OFF (not ON). In our previous workarounds where we wanted to reduce the animation effect (causing motion sickness in some people), we had to turn ON reduce motion. In this case, we're going to switch it back to the default (which is OFF).
Step #1. Go to Settings → General → Accessibility
Step #2. Tap on Reduce Motion and turn it OFF.
With this, your iPhone should no longer zoom-in the picture (when applied as wallpaper) abnormally and distort the beauty of it. But the animations work. So it's designed to be a win-win for users who want the animations but don't want the wallpaper to be zoomed in.
If you're not on iOS 7.1 yet or if you prefer an alternative solution, check out this post to fix wallpaper zooming issues.