It seems raphael supports multiline strings by putting "\n" in the text. This could be a cheap solution for you, systematically replacing " " by "\n" in your labels.
The other (more tricky) solution would be to replace the "text" element in the SVG generated by raphael by a foreign element that allows word wrapping:
<foreignObject x="20" y="10" width="150" height="200">
<p xmlns="http://www.w3.org/1999/xhtml">Wrapping text using some foreignObject in SVG!</p>
</foreignObject>
or if you need a fallback:
<switch>
<foreignObject x="160" y="10" width="150" height="200"><p xmlns="http://www.w3.org/1999/xhtml">Wrapping text using some foreignObject in SVG!</p></foreignObject>
<text x="20" y="20">Your SVG viewer cannot display html.</text>
</switch>
I don't know the best way to do this replacement of "text" by a foreign object: either after the Morris rendering or by hacking Morris/Raphael.