Yes! Here's how:

1. Go to the "Contact Action Bar" just above the list of names in your Contact List.
2. Click the down-arrow on the right end of that bar to open a menu of viewing options.
3. At the bottom, click Compact List to condense your list and fit more names into the window.

Done!

Warning: your friends' avatars and display images will get very small in the compact list! ;o) Click this menu any time to re-expand your Contact List by clicking Detailed List.

Break Contacts into Groups

Another way you can fit more into less space in your Contact List is to categorize your contacts into groups (work, chess club, etc.). Here's how.