The background is set via an image that is repeated vertically. You have a few options:
1. create a new image to use as the background that is at least as wide as the longest menu item you plan on using
2. move to a background image that you can repeat horizontally. The current images bg.jpg, grad.jpg (hover image) are repeated vertically, and since it isn't as wide as your wider menu items, you see "through" the menu item.
3. Move to a background color rather than a background image, that way the color will always expand to fill up the entire menu item.