Version:           2.5.5 (using KDE 3.5.5, Debian Package 4:3.5.5a.dfsg.1-6 (4.0))
Compiler:          Target: i486-linux-gnu
OS:                Linux (i686) release 2.6.18-3-486

This bug happens on certain kind of lines, and certain kind of cursor movement, and at least in C syntax highlight mode. Here's how to reproduce the bug in kwrite:

1)Make sure you have C syntax highlight mode on.
2)Add few lines (may be empty or whatever)
3)Add // comment to the beginning of the line with space after it (press ctrl-D)
4)Press tab
5)Hold any key down, untill the line will be broken to 3 lines so that what you see is: (tab is between the first and second lines)

//[space]
aaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaaa[window border]
aaaaaaaaaaaaaaaaaaaa[cursor]

Make sure that there are enough characters on the last line. At least 7 seem to be enough.
6)Press 2 times cursor up
7)Here's the bug: When you press cursor up, the cursor will not move to the line above, but stays on the second line

This happens at least in kate and kwrite. It doesn't seem to depend on window width, as long as the line is broken on 3 lines.