I got Earthworm Jim 2 working with my ps3 controller no problem, but am having trouble getting it to work with the first game. When i select the option to turn the gamepad on and it tells me to kill all the enemies, Jim just jumps around randomly. Controller is calibrated fine and works perfectly for Earthworm Jim 2. Any ideas?

I think the EWJ1 generally has some issues with controller compatibility and which problem you'll have depends of the controller you use.
I managed to make my Xbox360 controller working nearly perfectly, but the analog stick used for moving is a bit oversensitive and Jim walks right at times when I barely touch the stick. Kinda annoying, but works.

[edit] it seems that it works perfectly now...no idea why, after I restarted the game and calibrated the controller again it now works with no issues. no idea why ;p

Glad to hear! Maybe I'll try the 'xbox controller emulator' option with my dualshock 3 driver. Quick question though, how do you attack directly above and below Jim on the calibration screen?

Here's what works for me:
Hold the attack button first and then use the move stick to target.

Short issue, what work for me with x-box controller. Calibration won't help, 'cause in game it'll be lag on the diagonal directions. better to use joy2key and bind keys to arrows and any keyboard keys (except p,s,m,j,r) to buttons 1-4. And that will give perfect control.
PS OMG, that game is so hardcore... How did I play it in my childhood?!