Right-click on the Desktop and select Properties. Click on the Appearance tab, then under Item scroll down and select Icon. Pick a smaller size in the Size box, you might try 16 (the default is 32). You can choose just about any size you want, but 16 happens to be the same size used if you have Show Small Icons selected for the Start Menu display, or if you use Small Icons view in Explorer. Click on OK. (This works best if you make the words under the icons as short as possible).

Now you can go ahead and make any other adjustments you feel would be helpful, like choosing a smaller icon font, or adjusting the horizontal and/or vertical icon spacing to get the most out of your new found screen real estate.