The theme is set to have a set height header image Even if you don't have a block so I changed the header block to an if statement so that it only has a set height if you add a block with your header image.

      <?php if ($header): ?>
          <div id="header_block"> <!--START HEADER BLOCK-->
            <?php print $header; ?>
          </div> <!--END HEADER BLOCK-->
      <?php endif; ?>