Why is jquery resizable() not resizing to full width and height of the containment id assigned to it. You can try it at http://jsfiddle.net/C8YSU/6/ and see what i mean. Try to resize the created div, it will not resize to full width and height on the parent #container div. This seems to be caused by the draggable() function.
Adding a relative position to the #container div fixed the problem.