It's called Brachycephaly. And no, it won't round out anymore now that he's 3 1/2. But the good news is that if it's really pretty mild, the way you're describing it, then it's just totally cosmetic and he will have no other problems. My daughter had Plagiocephaly, which is when the head is flat on one side. This can push the facial features out of alignment and cause problems like TMJ or migraines later in life. Hers was pretty severe, and we did do a helmet and now its *pretty much* perfectly round. We all have different shaped heads, so as long as it's not causing any other problems your son is fine. And to be honest, you can't do ANYTHING about it now (he's WAY too old for a helmet), so you might as well stop worrying about it. Just don't buzz his hair and no one will notice :)
A side note here: what you are describing is the negative aspect of the Back to Sleep program. I'm not in anyway saying that it's not a valid program, but they scare you half to death about putting your baby on it's tummy. There really was no such diagnosis as Plagiocephaly or Bracycephaly 15 years ago. But this is becoming TONS more common. So, if you have another baby, or any of your friends do, be sure to emphasize the Back to Sleep is great, but EVERY time that baby is awake it needs to be on it's tummy. Obviously this excludes being in a car seat or something. But at all other times the baby should be on it's tummy. Sorry for the soapbox...just don't want others to have to go through what we did!