When you knit in the round, you're actually making a spiral, not a perfect circle, so the end of the round is a stitch higher than the beginning. What I do is similar to what you did - pick up a stitch in the middle of the first st and bind it off with the last loop. That brings the end down and fills in the gap. Sometimes I pick up an extra stitch in the gap too, then in the first stitch, depends on how large it is.
sue- knitting heretic