Kyros MID7015 Seems there is a bug in this application found inside the slider panel. When I try to set the fonts size to anything small (e.g. extremely small) it does not 'lock' in the settings and goes back to the large default size. Unfortunately now I have to browse with giant-ass fonts.
Just edit build.prop and change your lcd density to 200. It's much nicer than the default (which is 240, IIRC).
I switched from LauncherPro to ADWLauncher Ex and found it lets you change the size of the fonts on the icon labels. They look so much better with a small font!
You can also download lcd density from the market. it worked for me. i tried 200 but am on 160. testing different #s to get the best for me.