Bug with square screen capture in Lion OS X
I tried it in Lion 10.7.1 and can't confirm that issue. Creating two screen shoots (150x150 and 637x637) and both did have the expected size. Checked it with the Preview application.

Do you use a mouse or a touch pad? I find it rather challenging creating a square selection by using the Magic Trackpad. Especially since the size of the selection disappears after a second or so and is replaced by the absolut coordinates.