Platys, I know JUST what you mean. My knees don't hurt but I can't pedal as well as I could.

I'm 5'3" and have a 15" Trek 7.6 FX and I'm still trying to get the seat UP WHERE IT BELONGS. Heck, after a week of intense struggle, I finally conquered swinging my leg over the saddle and off the bike without tripping. Had the seat been higher I'd still be stranded in my driveway with one foot stuck on the top bar.

As someone said, move the seat up half an inch at a time till it's right. I doubt I'll ever get my seat all the way up like the pros but I can settle for comfort and security.