Elizabeth,
Don't panic--with applique, you expect that to happen. Your piece is very large and that's probably why it's so noticeable.
Are you using any kind of stabilizer behind your fabric?? On large pieces, I usually will iron on a product like Wonder-Under or Heat N Bond LITE. Some people swear by unused coffee filters too...
Normally, I cut my blocks about 2 inches larger than the finished size so that I can square them up once I have finished them. After assembling them and quilting them, I have not had any more problems.
HTH,