If there is too much white space between a graphic and text wrapped around it in your word processing document, you may need to change your paragraph line spacing units. Select Paragraph... from the Format menu. A dialog box appears which allows you to modify paragraph spacing attributes for the currently selected paragraph(s). In the pop-down menu next to the Line Spacing setting, the default unit for adjusting line spacing is "li" (lines). Using any other units, such as points or inches, for setting line spacing will result in a large amount of white space between graphics and the wrapped text.
The solution is to set the Line Spacing units back to lines in the Paragraph dialog. You can still flexibly change line spacing by specifying 1.5 lines, 2.0 lines, 2.5 lines, etc., however, the smallest fraction of a line you can specify is a half (0.5) line.