Hi,
I just started using Carrington, mainly as an experiment with one of my own blogs. I got the same result as you when I tried changing the Carrington setting (under Appearance) for adding an IMG to the header. My first thought was that Carrington, like other "framework-y" themes, would have an easy spot to override the CSS. Apparently not! What is frustrating is that I know exactly what has to be done, but not where to do it. The block of CSS below will allow the height of the image holder to be adjusted (change to taste, obviously).
#header .wrapper {
height: 150px;
}
But wow, I tried to find a place to put this change, and the CSS created on-the-fly by Carrington overrides it. I even tried editing the CSS files on the server under the theme in /CSS, and had no joy. Lots of README files, no help. So I think, unfortunately, you'll have to check the Carrington forum for help. Watch, they'll tell you, oh, that's so easy....
Classic example of an immensely powerful system becoming very hard to update. It's an amazing theme, but I think I'll stick with Thematic.
Good luck.