Yeah, Kobo devices handle widows/orphans (the splitting that happens to prevent having only a line or two of a paragraph be at the end of a page) very badly.

It's been this way for over a year and a half (which is how long I've had my Touch - May '11) and only happens in books bought from Kobo (doesn't seem to bother trying to split on sideloads).
Until Kobo decides to fix it (fat chance of that ever happening), the only thing you can do is reduce the font's size so that you have to hold the device up to your face in order to read. :/ Or strip off the DRM, find the variable controlling the feature, and then set it to 0...