As I mentioned in a Post earlier this week, type, in Photoshop can be confined to a specific rectangular area by clicking and dragging the Type tool. Once you've created a bounding box, Paragraph type, will wrap automatically.
Here's a good trick if you need to create a specific-size bounding box.
Select the Type tool.
Holding the SHIFT + Alt keys, click in the document area.
The Paragraph Text Size dialog box appears.
Enter a Width and Height.
A bounding box appears that is exactly the size you need.