The camera orientation in Smoovie can be a little confusing. Unlike a normal camera app there may be cases where you do want the captured image to be upside-down (for example, the view from inside a plane doing a loop the loop).
Smoovie behaves slightly differently depending on whether you have the iPad's rotation lock on or off. If you rotate your iPad and the user interface flips then the iPad's rotation lock is off. If the user interface doesn't flip then it's on.
With the lock off, if you rotate the iPad 180° to the point where the user interface flips round you should see the video feed flip relative to that interface. So, if you hold the iPad with its volume controls at the top-left, the capture button should be at the bottom and the video should appear correctly. When you rotate the iPad so that the volume controls are on the bottom-right, the capture button should have rotated back to the bottom, but the video feed should now be upside down.
If the iPad's rotation lock is on, as you rotate the iPad the video feed should appear static. So, if you rotate the iPad such that the capture button appears at the top of the screen the camera view should appear correctly. However, in this instance as the camera is upside down relative to the user interface pressing the capture button will result in an upside down image being captured!
If you ensure that the iPad's rotation lock is off and hold the iPad so that its volume controls are at the top left everything should be right.