Running in the classic windows theme, or checking "Disable desktop composition" in the properties for matlab.exe both work for me. (Changing the Java engine did not seem to make a difference, though.) However, both of these settings will prevent you from using the Aero theme.
I got MATLAB 2007b to work with Aero by following the steps on this link:
1. Right click on my computer, and select properties 2. Click "Advanced system settings" 3. Click "Environment variables ..." 4. Click "New ..." and add a variable named "MATLAB_RESERVE_LO" with a value of "0".
Hit "OK" to close these dialog boxes, and MATLAB should work just like a normal program in Aero!