This days I had to reinstall Ubuntu Gutsy Gibbon on my laptop but I encountered some problems. Must be mentioned that this issue didn’t come up neighter in 7.04 nor in 7.10 after upgrade.
The problem was that huge fonts were displayed on each window’s title bar (even during install process) and in the login window textbox.
The solution came from ubuntuforums
sudo gedit /etc/gdm/gdm.conf
Find in this file the section
[server-Standard]
name=Standard server
-command=/usr/bin/X -br -audit 0
and change it to
[server-Standard]
name=Standard server
-command=/usr/bin/X -br -audit 0 -dpi 96
It solved my problem with Gutsy Gibbon 
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