That is because it is designed for TV (controller, really) use only and emulates the UI for PS3 and Xbox 360. Unfortunately, and just like both of those, it is a horrible waste of space and takes bloody forever to scroll through any list that isn't short (like your Friend's list... a grid pattern would be thousands of times more efficient).
It would also be great if you could disable the big picture button because it is, well, kind of big, and right next to useful buttons for minimizing or closing Steam and is completely useless on a 22" monitor.