Your problem is that you are setting a background image in something that is smaller than the background image.
For instance your home link, it is 34px * 15px.
Your home-button is 185px * 50px.
Now the question might come to mind: How to do this?
Your current menu is text-based and has a background image.
Even though you can actually style the LI-element or the A, I guess you want your entire button to be clickable.
You can trigger this via. JQuery, though I prefer doing it the "Old skool way" with transparent <img>.
I'd do something like:
<img src="/path/to/trans.gif" width="185px" height="50px" alt="Home" />
There are many ways to do this, depending on how much you wish to code.. The most "silly" and simple way, is to just make this a static menu.. Or you can code some way to dynamically making the menu with the images.
Ps. I would still set the background image with the transparent gif. I have done something similar with a map once, and often I do it with header images.