I see you are on wordpress 2.9.2, if you upgrade to wordpress 3.0, it comes with a dropdown menu generator, its part of wordpress now (well the menu generator is, you may have some work to do to make it dropdown)
If you were to upgrade, the new default theme that comes with wordpress, called TwentyTen, has a fully customizeable dropdown menu.
Or you can do what I did, upgrade to 3.0, and then steal the code from the new theme that makes the menus work, and drop it into your theme. But many themes are being upgraded to work with 3.0s new menu system, your theme might have an upgrade, or you may be able to find one you like
