This question was posted in 2011, and someone has said that QGIS now allows multiple lines for legend entries, but no one mentioned how to do this. I am running wein 2.8.1 and I cannot figure out how to get my legend entry on multiple lines other than manually using text.
In QGIS 2.8 Composer, there's a Wrap text on option in the Item properties tab when you add a legend which lets you enter a character where you want the new line to start. What I normally do is use the
* character in the layer's name for where I want the new line. Then input the
* into the Wrap text option.
(I'm using QGIS 2.8.2-Wien):