In CSS, you can do the following to move the menu above the header:
ul.art-hmenu {
top: -30px;
}
You can shrink the padding around the menu elements like this:
ul.art-hmenu > li > a {
padding 0 8px; /* or whatever you like */
}
Those two changes will let you have quite a few more menu items. These can be set directly within Artisteer too, so that might be your best bet.
Jamie