When it comes to cells, I like my content to look either like the first cell, or the second cell. If there's enough room for all the content; great. If there isn't, I like a nice wrap.
To wrap content in a cell, select the cell or cells then choose Format > Cells, Alignment tab, and select Wrap Text Automatically.
If you've got just barely not enough room, you can also move your mouse over the right-hand border of the cell's COLUMN separator, and when it looks like this, double-click. Bam, the whole column will be just barely as wide as the widest cell in the column.
Here are a couple other options that I just started looking at. Shrink to Fit Cell Size, and for the horizontal justification, Filled. You get to them the same way you get to the wrap option: select the cell or cells then choose Format > Cells, Alignment tab, and select the options you want.
Here's how each option looks. The demo content is in plain text and the explanation is in caps to the right of the relevant cell. Frankly I'm not sure how much I would use the Filled justification; seems a little dangerous.