One of the changes in Firefox2 is that there is a limit on how small a tab can be. So what if you have so many tabs, that all tabs at the minimum width won’t fit in the window? That’s when people notice that Firefox2 adds scroll arrows on each side of the tab bar.
But what about those who prefer the old behaviour? You can revert it to the old Firefox behaviour, by entering about:config in the address bar. In the resulting page, search for the preference browser.tabs.tabMinWidth. Double-click on it, and set the value to 0. Then search for the preference browser.tabs.tabClipWidth. Double-click on it, and set the value to 0.