If I only have 3 items in a grid then it should only be as tall as it needs to be to show them, but if I have 100 items then I want it to be tall enough for 10 items or for say 300 pixels and turn on scrolling. If it's shorter than the threshold I don't want the scrollbar shown at all.
I believe the discussion/sample from the following forum thread can help you achieve what you are after: http://www.telerik.com/forums/max-height-on-grid