Understand that you are tossing monies in a corner trash can when you continue to try to drag along a 5-year old template and make it work with current versions. 1.5.6b will have you repeating the process in even more ways.
Your solution is stylesheet.css line 270. You can delete the padding call all together and turn the margin-bottom to some negative number around -50px in order to close the gap.
IF you do that, you will need to change the color on the border call to something other than #fff. Otherwise the customer may not be able to tell whether prices go with the item above or the one below.
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