How can I make Ubuntu/GNOME look better i.e more smaller and compact?

The GTK themes tend to have a lot of padding. A theme like Clearlooks compact gives Eclipse a whole new look. See here, for instance: http://martin.ankerl.com/2007/11/04/clearlooks-compact-gnome-theme/

On the other hand, you can hand-edit the files and achieve a customized look. See here: http://lj4newbies.blogspot.com/2008/02/make-your-eclipse-look-better-on-ubuntu.html

For font sizes and smoothing options, check the Appearance Preferences > Fonts tab. Then click on the "Details" button:

Play with the settings till you get what you like.

If I understand correctly, you're not really after the Windows theme. So you can keep the default gnome look, or - which most would probably prefer - try out different themes (and there are quite a few that are really good). Check out http://gnome-look.org/ and http://www.deviantart.com/. Both sites have some really good themes and other customization tools to make gnome look very different than the default.