I'm having some really annoying problems with UDK lightmaps, and since I'm somewhat of a UDK noob, I'll buy whoever can tell me the really obvious answer a cookie. Shadows are obviously really blobby and low res, even though I tried bumping the lightmap size on the bsp up as high as I can. Funny enough, if I put it lower, the shadows actually get higher res, although even at .1 they still look pretty horrible, they just take forever to bake even on this simple scene. I'm really hoping it's not my laptop, it's a few years old.
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If this is the only light in the scene, you could try using a dominant light. Here's some info on them: http://udn.epicgames.com/Three/DominantLights.html
http://udn.epicgames.com/Three/Lightmass.html#Area lights and shadows
(Notice how the shadows are sharper as they get closer to the bottom of the pillars, this is an area light/shadow effect)