It's because of the bias edges.
Here's a .pdf of the pattern - maybe that will help you.
https://docs.google.com/file/d/0B5sh...MGc/edit?pli=1
You need to be very careful once you cut the blocks - try to minimize any stretch to the edges and press very gently.
Once they're stretched, you've got bubbles.
I would suggest you starch the strip sets BEFORE you cut the blocks.
That should help keep the squares square.