Either use an analog joystick or edit four lines in the source code.
The best is to use an analog stick. The original machine used them*, and for the most realistic game play you should use them too. With digital sticks/keyboard, it's very hard to shoot the "22.5o" angles (half way between the cardinals and the diags).
If you must use digital inputs, you can edit src/drivers/eprom.c, lines 249, 253, 257, & 261 by adding the IPF_CENTER flag (ie add "| IPF_CENTER") and recompile. There are problems with this though, as you will find out: shooting the "22.5o"s will be even harder than before, and facing a certain direction without shooting will be harder, too. Here's the code
PORT_START /* ADC0 @ 0x260020 */
PORT_ANALOG( 0x00ff, 0x0080, IPT_AD_STICK_Y | IPF_PLAYER1 | IPF_CENTER, 100, 10, 0x10, 0xf0 )
PORT_BIT( 0xff00, IP_ACTIVE_LOW, IPT_UNUSED )
PORT_START /* ADC1 @ 0x260022 */
PORT_ANALOG( 0x00ff, 0x0080, IPT_AD_STICK_X | IPF_REVERSE | IPF_PLAYER1 | IPF_CENTER, 100, 10, 0x10, 0xf0 )
PORT_BIT( 0xff00, IP_ACTIVE_LOW, IPT_UNUSED )
PORT_START /* ADC0 @ 0x260024 */
PORT_ANALOG( 0x00ff, 0x0080, IPT_AD_STICK_Y | IPF_PLAYER2 | IPF_CENTER, 100, 10, 0x10, 0xf0 )
PORT_BIT( 0xff00, IP_ACTIVE_LOW, IPT_UNUSED )
PORT_START /* ADC1 @ 0x260026 */
PORT_ANALOG( 0x00ff, 0x0080, IPT_AD_STICK_X | IPF_REVERSE | IPF_PLAYER2 | IPF_CENTER, 100, 10, 0x10, 0xf0 )
*Yes, the machines used "Hall Effect" joysticks, but this is just a type of analog joystick; two other types are "POT" (most common) and "optical" (optical is a type of digital stick, too). (FWIW, the three types of digital sticks: (leaf, microswitch, and optical), and the two types of mice: (optical and encoder wheel).