In your example with character wrapping you forgot to use !important after the height: auto setting.

I agree that the problem with column resizer really exists in my demo from the my old answer. So I improved it. Moreover I try to describe in which situations can be important to use character wrapping instead of word wrapping.

The new demo with the word wrapping is here. the code is the following:

var grid = $("#list"), headerRow, rowHight, resizeSpanHeight;

grid.jqGrid({
    ...
});

// get the header row which contains
headerRow = grid.closest("div.ui-jqgrid-view")
    .find("table.ui-jqgrid-htable>thead>tr.ui-jqgrid-labels");

// increase the height of the resizing span
resizeSpanHeight = 'height: ' + headerRow.height() +
    'px !important; cursor: col-resize;';
headerRow.find("span.ui-jqgrid-resize").each(function () {
    this.style.cssText = resizeSpanHeight;
});

// set position of the dive with the column header text to the middle
rowHight = headerRow.height();
headerRow.find("div.ui-jqgrid-sortable").each(function () {
    var ts = $(this);
    ts.css('top', (rowHight - ts.outerHeight()) / 2 + 'px');
});

It use the following CSS

th.ui-th-column div {
    white-space: normal !important;
    height: auto !important;
    padding: 2px;
}

and produce the following picture

(I included <br/> after every character in the first column to make the text "Inv No" by placed on many rows).

Everything look very good, but it can be some situations that you can one very long word in the column header. Some languages like German build sometimes long words like "Softwareberetstellungsform" which consist from many words. In the example it was "Software", "bereitstellung" and "form". In other languages the same situation is also possible, but is not so frequently. As a result one will receive the following (less perfect) picture (see the demo here):

You can see that the texts "AmountInEUR", "TaxInEUR" and "TotalInEUR" are cut off. One can either include manual line brakes (<br/>) in the column text or use character wrapping which I described in the answer. If we change only the described above CSS for th.ui-th-column div to the following

th.ui-th-column div {
    word-wrap: break-word; /* IE 5.5+ and CSS3 */
    white-space: pre-wrap; /* CSS3 */
    white-space: -moz-pre-wrap; /* Mozilla, since 1999 */
    white-space: -pre-wrap; /* Opera 4-6 */
    white-space: -o-pre-wrap; /* Opera 7 */
    overflow: hidden;
    height: auto !important;
    vertical-align: middle;
}

we will receive the following results (see the demo here)

By the way the character wrapping work in some browsers like Google Chrome as word wrapping (!!!) if the text contains spaces. So the demo will be displayed in Google Chrome, Safari, Opera, Firefox like in the picture above with the word wrapping, but the same demo in IE (inclusive IE9) will be seen as

So no way is absolutely perfect, but the character wrapping have some advantages for all modern web browsers with the exception Internet Explorer (version < 10). The usage of <br/> inside of column text or the usage of CSS which depend on the currently used web browser can make the solution much better.