Several people here and elsewhere have been asking why the Aero Basic window frame looks like it does, and why it is different from the Aero frame (especially the caption buttons).

I won't give the technical explanation for every single detail here (that would be extremely boring), but I'll try to give you some answers. Here are some gory details nonetheless:

Anatomy of a caption bar
Why isn't the Close button oversized compared to the Minimize and Maximize buttons, like in Aero?
In pre-DWM Windows, all buttons must have the same size, because there's only one set of metrics to query the size of a button (SM_CXSIZE and SM_CYSIZE, see GetSystemMetrics()). If you look at the TITLEBARINFO structure returned by GetTitleBarInfo(), it says nothing about the size of the individual buttons.
A lot of applications draw their own buttons or even their own captions. Lots of accessibility tools report the position of the caption buttons. Some applications trigger actions by simulating a mouse click to a precise position. All those applications compute the position of buttons based on a multiple of SM_CXSIZE (plus delta), so if the Close button was bigger than SM_CXSIZE, those applications would get all their button positions wrong, so they could draw a new button right in the middle of existing buttons, or click on the Close button when thinking clicking on the Maximize button.
For Windows Vista we fixed this by exposing a new API, WM_GETTITLEBARINFOEX, but of course no application outside of Windows is using it yet. The Accessibility framework has been updated to use it.
Then how is the DWM getting away with it?
The DWM doesn't have any legacy worries because applications cannot draw inside the glass frame, since it's rendered and managed by a totally different process. If an application tries to do it, Windows will detect it and remove the glass frame entirely (and therefore revert to the Basic frame), so that the application can draw what it wants to draw.
Why didn't you change the legacy window manager then?
For application compatibility, of course. We have a brand new Window Manager (the DWM) where we focused the innovation, while trying not to touch the legacy window manager unless absolutely necessary, so that we can have *both* compatibility and innovation - best of both worlds.
Why aren't the caption buttons bigger in Aero Basic?
Like the anatomy picture above shows, the height of the buttons (SM_CYSIZE) determines the total height of the caption, so raising it would have made the caption even taller, and because of all the padding, the designers felt that the caption was already tall enough. So we made the buttons wider instead.
In the end, those buttons have a surface of 420 pixels where XP had 441 pixels so they're just 4.75% smaller than XP, which seemed good enough (XP had rather good sized captions). The Aero buttons are slightly taller and are 6% larger than XP, with the Close button being larger still, but in the end the difference isn't that big.
What if I don't like them this small?
We decided not to raise SM_CYSIZE by default, but that doesn't mean you can't do it yourself. Just go to Control Panel > Personalization > Window Color and Appearance (if you're running Aero there's an extra page with a Open Classic Appearance Properties for More Color Options link, see Vinny's post), click Advanced and change the Active Title Bar size. XP had 25.
What's with the extra border?
You will notice in the anatomy picture above an extra iPaddedBorderWidth padding, that wasn't there in XP. That's the glass border (4 pixels by default), upon which the Aero look is based.
This metric is new and different from the pre-existing border metric (iBorderWidth, 1 pixel by default):
iBorderWidth is used in a lot of places other than the window frame, like splitter windows and many surprising places. So if we increased it, you would have seen extra fat splitters, and other undesirable effects.
Contrary to iBorderWidth, iPaddedBorderWidth affects both resizable (thick) and non-resizable (thin) frames (so it makes thin frames not-so-thin anymore, which was desired for glass).
In a nutshell:
thick frame padding = iBorderWidth + iPaddedBorderWidth
thin frame padding = 1 + iPaddedBorderWidth
So even in Aero, if you like thick borders but not for non-resizable windows, you can set the padded border to 0 and increase the "Active Window Border" instead; you'll get thick glass borders, but in less places (although you'll get the side effects of thick splitters, etc.).
But I'm running Aero Basic not Aero so I don't have glass, so why put a thick "glass" border there?
We deemed important to have only one set of system metrics for both Aero and Aero Basic. It has several advantages:
What if I don't like it?
Like for the caption height, both values can be changed in the Personalization CPL.
To go back to the XP frame padding, just set the Border Padding to 0:

To *really* go back to an XP-style frame, also set the Active Title Bar size to 25:

So are those buttons big enough for you now? ;-)
Why does Aero have a solid 1-pixel black border inside the frame, and Aero Basic doesn't?
Because the DWM is rendering this black border, and the DWM is absent in Aero Basic. The glass starts in the non-client area and stops after the client glass margin, and there's intentionally no seam between the client and non-client glass areas.
This client/non-client blend illusion is kept in Aero Basic for windows without caption text, like Explorer and the Aero Wizards. So if we added a solid border to the Aero Basic frame, here's how it would look:

You can see how this solid border is a problem visually.
We couldn't just put a solid border on the left, bottom and right edges but end abruptly at the top, and we couldn't make the client area responsible for drawing this border - the whole point of skinning is to be able to vary the non-client area without affecting the client area, so the application should have no knowledge of this.
We tried several different approaches, like this one:

But none of them looked right.
We could have tried implementing several types of frames for different types of applications, but the engineering cost was high and there was a risk of regressions, so in the end we decided to keep things simple, and just removed the solid border from the Aero Basic frame.
So that's the story of it. In the end, different methods are used to draw Basic and Aero, each with different constraints. Basic was designed to complement Aero, but in working with greater constraints trade-offs were necessary.