how do i change my calendar settings, so instead of seeing 12/5/2011, it actually spells it out, like december 5, 2011?
I don't think you can with the stock widget. You'll have to download something else. I use the Minimalist Text Widget for the date, but I use a different and transparent calendar widget for any daily events (Simple Calendar Widget).
This is how mine looks with and without a daily event scheduled for that day: