PDF is based on a layout standard for printing. The whole idea is that the page will always look the same. If there is an iPad app that will break the PDF formatting and word-wrap, I don't know of it. That's not to say it does not exist, just that I don't know of one.
There are some computer apps that will attempt to reformat a PDF into an ePub or other ebook format. The success rate depends heavily on the PDF, and generally works 'ok' at best.
All web browsers word-wrap, unless the formatting/coding of the site prevents it. Safari (and third party browses) on the iPad are no different. However, Safari normally just zooms in and out of a page without changing the font size, and there is no tool for changing the font size. To get around this you can use a bookmarklet that will increase/decrease the font size on a page you are viewing.
You'll find instructions for doing that here:
http://www.ipadforums.net/ipad-faq/72353-guide-creating-safari-bookmarklets.html#post519309
Some third party browses, like Atomic, have the ability to change font size built in.
