This border is specially added to increase the size of the button as a touch target. Having this add-on makes it easier for people to be sure that they are touching the control they are aiming for.
If you try to remove this to fit more controls on the page, you know that you are likely to make it easier for users to accidentally use the wrong control.
If you really have to do this, you must reinstall the button control.
The only difference you need to make for the default template (you can get a copy of it from Blend) is to change the field on the controller with
<Border ... Margin="{StaticResource PhoneTouchTargetOverhang}">
what value suits you.
Also note that by changing this value, you are likely to create problems for yourself when smaller screen devices are introduced.
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