The empty option is generated when a value referenced by ng-model doesn't exist in a set of options passed to ng-options. This happens to prevent accidental model selection: AngularJS can see that the initial model is either undefined or not in the set of options and don't want to decide model value on its own.
If you want to get rid of the empty option just select an initial value in your controller, something like:
$scope.form.type = $scope.typeOptions.value;
Here is the jsFiddle: http://jsfiddle.net/MTfRD/3/
In short: the empty option means that no valid model is selected (by valid I mean: from the set of options). You need to select a valid model value to get rid of this empty option.