After upgrading gmail on my phone, I also noticed straightaway how small the font was; hardly usable. On my tablet, it is fine. I went into accessibility settings, changed it to large; this fixed it, but across the whole system, large fonts are not great.
Ohh! My Font settings was "smallest" and one option on the gmail setting was somthink like "adjust mail to fit screen" (translated from my phone language) was checked. Changing the system font size make it readable again. Thanks to all, Cheers!!!
I had the same setting: "Auto-Fit messages". Now I have turned it off, and it is much better. However, the previous version worked fine with the same setting.
There is still the issue of too much wasted space on the new version. Maybe it is my normal initial reaction to such a big change, but so far, I find it a step backward on phones (tablets are ok).