The default for Photoshop CS3 is auto hyphenation on, so if your text doesn’t break cleanly in the space you’ve defined, Photoshop will automatically break the offending word with a hyphen. Sure you can force return at the end of the line but that trick is for hackers. I’ll demonstrate the proper way to achieve this using the lyrics to the Bruce Springsteen classic “Growin’ Up.”
I assume you already have a Photoshop document open with some text that is hyphenated. To turn off hyphenation, select the Paragraph Panel in the Window drop down menu.

To turn off auto-hyphenation in all instances, click the small check box marked hyphenate. When the check box is empty, hyphenation is turned off. If the box is checked, then auto hyphenation is turned on.

To affect only specific paragraphs, select those paragraphs only.
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Take this image for example. It is 5″ high, 72 dpi.





