I have seen this happen with a digital servo like that one, whereas with a standard servo things worked OK - have you tried a standard servo?
I also noticed in some specs I pulled up on TowerHobbies that the neutral band is 1310us; I am not sure if this would be an issue with the library or not, but they mentioned on TowerHobbies that it would cause problems with certain older AM transmitters - they list the same thing at Futaba:
You may need to adjust the parameters of the library using the setMinimumPulse() and setMaximumPulse() methods. See:
http://www.arduino.cc/playground/ComponentLib/Servo
You may also need to tweak the library directly. I can't tell you much beyond that because I haven't played with any of the digital servos yet...
