Comment 89 for bug 40872

See this post: http://ubuntuforums.org/showpost.php?p=6512055&postcount=6
"I think ive found a solution in gconf-editor: apps > nautilus > icon-view, then check default_use_tighter_layout. this solves the horizontal overlap. the vertical overlap problem still remains since the align grid gets smaller, but using Clean up name helps."
I think this should be the default setup.