Just glancing at the code...
The images in the slider have a height of 250px. Cool.
The height of their container, .pics, has a height of 250px. Hmmmmmmmm.
Looking back at the images......
The images are surrounded by padding:2px and a border of 2px, which adds to their dimensions, so their container needs to have a height of 258px.
Give .pics a height of 258px and magic happens <smile>.