I'm using Cygwin bash prompt, and for long commands the text will wrap around on the same line as opposed to going to the next line despite setting my PS1 to simply ' $'.
Here's a screenshot,

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Something is broken in your terminal settings (probably). While you don't get a solution for the Cygwin terminal, give MinTTY a try (its actually better). | |||
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I had the same problem with MinTTY as well. The problem probably has something to do with the primary prompt (PS1). The solution for me was removing the last 'new line' character from PS1 (right before the '$' sign):
see http://cygwin.com/ml/cygwin/2001-07/msg00140.html for reference. | |||
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TERMenvironment variable set to? For the Cygwin console, it should becygwin. – ak2 May 14 '11 at 5:55