I am having the same problem on the Ms. magazine blog.
I tried editing add “float:left” to the thumbnail code in wordpress-popular-posts/style/wpp.css:
img.wpp-thumbnail {
margin:5px;
float:left;
clear:both;
}
That worked to move the text up, but caused a whole ‘nother slew of problems:
-The image margins/padding disappeared, so the text ran up against them
-The images overlapped from one line to the next (as though they were not being taken into account in the list spacing).
–Also, setting the border:1px; there seems to have no effect
I’d be hugely grateful for any help/advice!