It's coming from the thumbnail size values you've set in the HikaShop configuration, which is probably 300x200px. You'll want to leave these because you need this size in your product listings, but it results in the height of the (much smaller) category thumbnails also set to 200px.
So, the CSS should be like this:
.hikashop_subcontainer .hikashop_category_image {
height: auto !important;
}
If you'd want the category name even closer to the image, you'll need to add this, too, to get rid of a <br/> in the HTML:
.hikashop_category br {
display: none;
}