I just downloaded Ubuntu 11.10 for the first time. I really enjoy the launcher on the left hand side but have a problem. After playing around with adding applications in it, there are large spaces from the last application to workspace switcher. If I try to drag a new application into the launcher everything moves farther down, instead of filling in the space in between apps. When I right click on the launcher in a blank spot it reads "drop to add application." I'm looking for a way to have all of the applications close together with no spaces, like when I first downloaded Ubuntu.
I was having the same problem. My launcher seemed to be under the impression that there were numerous icons between the last icon on the list and the workspace switcher, which caused it to take up a ridiculous amount of vertical space. I right clicked on the blank space and alternately checked "Lock to Launcher" about 20 times and that seemed to do the trick.
I hope you understand what I'm saying and I hope it helps.