Are your elements display: block ? Inline elements might make the placeholder not keep the height correctly. Eg. this jsFiddle seems to have a similar problem to the one you described. Adding display: block to the .portlet class fixes it.
I usually solve this by binding a callback that sets the height of the placeholder to the height of the item being sorted to the start event. It's a simple solution that gives you fine-grained control over how you want your placeholder to be displayed.
In my case I found solution similar to JP Hellemons, in which I'm forcing height of placeholder (with !important) to custom and also setting visibility with background to see changes for myself (also you can style this way your placeholder anyhow you want).
This works also with display: inline-block;
.ui-sortable-placeholder {
background:red !important;
height: 2px !important; // this is the key, set your own height, start with small
visibility: visible !important;
margin: 0 0 -10px 0; // additionaly, you can position your placeholder,
} // in my case it was bottom -10px