Which picker/app is that? Here's the time picker in the Clock app (for setting alarms) on 4.3 (CM 10.2):
Personally, I rather like the new time picker and have never experienced any usability problems. Also, the appearance depends on your time settings; the inner circle the parent poster mentions only appears if you use 24-hour time.
Which is only the vast majority of the world (about half a dozen countries use 12h clocks as a standard in written form).
(as it turns out, that means the vast majority of the world won't give a fig about the AM/PM selector being broken, the touch targets are a much bigger issue)