You need to make two small changes:
Firstly, in custom-header.php change the image height in the following code:
// constants
define('HEADER_IMAGE', '');
define('HEADER_IMAGE_WIDTH', 980);
define('HEADER_IMAGE_HEIGHT', nnn);
(replace 'nnn' with your image height)
Secondly, you need to make a change to the style.css file, but not via the WP dashboard/editor. That file doesn't seem to do very much!
Instead find /wp-content/themes/painter/css/styles.css
Then change height value in the following code:
/**************************************************************************************************
Header
**************************************************************************************************/
#header
{
clear:both;
width:980px;
height:NNNpx;
}
hope that helps :)