How do i avoid wasting all this space. I'd much rather the images be larger and closer together! = )

well, you could enlarge them, then crop them and reposition them in photoshop...

Using the File > Automate > Contact Sheets II command, there's always going to be a lot of white space - that's just how PS does it. When you're setting the sheet up, you can reduce the number of columns and rows and that will make the thumbs bigger, but that's about as far as it will go. It's not a function that I've found any practical use for yet. Much better to make your own from scratch - if you record an action, it won't take long to do.

As stated by cambert use the File - Automate - Contact Sheets II. On that menu, uncheck "Use Filename as Caption" and that cuts a lot of space between images. Of course they won't be captioned then.