once you back up the piston on the caliper, there should be enough room for you to slide it back onto the rotor, even with fresh pads on. if the rotors have a lip on them or is glazed (shiny), have them resurfaced. lube the pins, like everyone is saying, replace if necessary.. Good luck
when i changed front pads last i forgot the lube for the back of the pads and sometimes i will get a squeak when i start braking, its not that annoying.
Did you hit the brake pedal yet? They should be roomy (LOL) after retracting the piston and installing the new pads. Once you depress the brake pedal, the piston will extend to a normal position. That is, resting against, or very close to, the rotor.