=== EDIT ========
This issue is now solved in Xcode 8.1. I have checked.
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I don\'t know auto-layout
Apple just came out with XCode 8.2, which fixes this problem for me. I have been using XCode 7.3.1 for my interface design parallel to 8.1, but I can now use 8.2 without any problems.
The storyboard gets updated with widths and height of frames though, to accommodate the new 'View as:' functionality. Though it doesn't seem to affect running on device/simulator.
Curiously, the bugfix it is not noted in the XCode 8.2 release notes.
Original answer here