The reason it looks different is because the M8 uses modular technology. You can refit the same basic weapon so that it works like a carbine, "sharpshooter" rifel, compact, or automatic rifel.
http://www.globalsecurity.org/military/systems/ground/images/xm8-poster.jpg
Your first pic is indeed bigger because it has a 25" barrel on it compared to the 12.5" barrel in your 2nd pic.
Remember that making the gun shorter is A VERY GOOD THING. One of the chief problems for our infantry in Iraq is how cumbersome the M-16 is to handle while in a HUMVEE. The last thing you want is a big barrel getting stuck the vehicle when you get hit with an ambush. If you haven't figured out yet, I'm a big fan of the M8 but admitedly have never shot it.
Although I will agree with you that I think the army should pay a little more attention to what happens when you get into hand to hand combat. Let's not forget that Scottland's 'Black Watch' performed a bayonette charge in Iraq in just 2004.