There is no sprite tool that can directly expand the image dimensions when you resize a part of the image or at least I'm not aware of one. For sprite editing we can only recommend general purpose image editing tools as Adobe Photoshop or the free ones like Paint.NET and Gimp. In all of them you will need to manually move the parts of the image below the area you want to expand in order to make room for the change. This will also lead to editing all the background-positions in the CSS file in order to accommodate the change.
I'm attaching a psd file for the RadMenu sprite, you can check the layer names for more information which layer is used where. You can also use this file as a starting point for your skin.
If you still have problems creating your skin, you can send me the skin in its current state and a screenshot/mockup of how it should look and I will expand it for you. Open a support ticket if needed.
All the best,
the Telerik team