Currently we need to wrap our text by hand, I'm extremely happy with the working flowtext. But speaking about nice features, justifying text and auto-hyphenation would be a killer app. I heard pjrm and njh have some ideas for this.
Text justification does work right now, there's just no UI for setting it. Add "text-align:justify" to the style attribute of the text you want justified.
Hyphenation is written (with some caveats regarding ligatures) but, to my knowledge, it's never been tested. Bugs should be filed in the usual way, and please assign them to cyreve. Note that Inkscape will only split/hyphenate words where there are existing unicode soft hyphen characters (u00AD) and we do not have multilingual text analysis code (or even just English) so you'll need to find a separate programme to pre-process your text. I've just done a very quick search and found OpenOffice's hyphenator at http://lingucomponent.openoffice.org/hyphenator.html, which looks like it could be made to work without too much effort.
Richard.