This example uses a class on the placeholder to turn it into a line and make it take up no room.
HTML
<div id="sortable">
<div>1</div>
<div>2</div>
<div>3</div>
<div>4</div>
</div>
JS
$("#sortable").sortable({
placeholder: 'placeholder',
helper: 'clone',
start: function(event, ui){
ui.item.show();
}
});
CSS
#sortable div{
background-color: #f00;
width: 50px;
height: 50px;
margin: 10px;
padding: 0px;
}
#sortable div.placeholder{
height: 4px;
margin: -7px 10px;
}