As for the hem..you should have used the "stretch stitch" feature or a zig zag on it.Then it will give...also you can stretch it as you stitch it if you don't have the "stretch feature" on your machine.
I hope this helps.
Stretching the fabric while sowing is fine when you want to make ruffle details but can often lead to an uneven hem. Which I assume you aren't looking for
You can use the stretch stitch or a zig zag on the machine, but the very best way to avoid problems is to use the proper needle!
*puts on school teacher glasses*
For stretch fabrics you should always use a stretch needle. The thing about such a needle, is that the tip is more pointy than a normal needle. Making it possible for the needle to go down between
the fibres and not through
them. This keeps some of the stretchiness and makes the hem lay nicely onto the fabric.
If you use a normal stretch needle you should use the zig zag hem as SewnMemaw suggested.http://z.about.com/d/sewing/1/0/w/x/1/stretch.jpg
You do however have an alternative that often looks more professional: a twin stretch needle. The (twin) stretch needle come in different width from 1,6-8mm (1/24"- 5/16" ish). I personally like and use 3-4mm. Here is a little about what the standarts are:
1.6mm & 2.0mm - Pintucks and delicate sewing.
2.5mm & 3.0mm - Hems or pintucks.
4.0mm - Decorative hems.http://www.ggcreations.com.au/althea/needles/twin.gif
I could unfortunately not find a picture of a twin needle hem, but just take out a regular shirt of any kind and look at that!
Hope this will help you! Good luck with sewing more stretch fabric!