I use Video Studio 7 and there are optoion for both formats, 16:9 and 4:3.
But whichever format I choose I always end up with a widescreen DVD.
So the answer must be yes it does.
When everything is ready to burn, I have started using Nero 6 recode software lately. It automatically ajdusts the size to fit in the 4.3gb disk.
Video Studio will just refuse anything oversize.