If you change your screen resolution (like Spencer) or resize your browser (like I do often) to 800×600, you'll find that the Add Media dialogs are too big to fit.
Spencer has uploaded a screenshot of this here: http://www.vindictivebastard.com/images/image-uploadss.jpg
This comes from lines 170-173 of wp-admin/includes/media.php (rev 7517). If you change the height=500 in those lines to height=400, it works much better on 800×600.
I've attached a patch to change the heights to 400, but I'm not sure if it's the right way to go about it. A better solution would be to dynamically change the height with JavaScript? depending on what it detects your browser size as so it can accommodate automagically, but I don't understand any of this, so I can't really do it myself.