Indeed it is a rather bizarre issue. When I first tried my headphones and noticed the lack of stereo, I was starting to wonder whether my phone developed a fault as I had one previous phone where the headphone socket would intermittently switch between stereo and mono depending on how I touched the headphones jack. However, after flicking through several songs and landing on the odd song that did fully play in stereo, I realised it was the app. Sure enough, when I tried the songs that played in mono on my PC's web browser on Google Play Music, they all played in stereo, so at least I knew the music in their library was in stereo.
I also can't quite figure out how they managed to introduce a bug that causes it to mix the channels together to play in mono, unless they were working on some retro "mono sound" feature that unintentionally made it into the release enabled. At the moment, I'm happy using the phone's older factory installed version that at least plays music in stereo.