Is there a solution for this problem? I'm having similar issues. I've tried playing with button padding but that didn't fix anything, neither did the wrap-in-table trick.
Even when no other stylesheets are involved, just a simple page with a formdecorator and a button, the problem occurs. Only in I.E. 8. All other browsers are fine.
The only skin that does work well is the "Simple" skin.
When i try to use the Telerik Formdecorator demo page with the same I.E. browser, the problem sometimes occurs and sometimes not.. Most of the time i can see at least one or 2 small errors with the buttons.