User blog comment:BertH/Layout and navigation updates coming October 3/@comment-99756-20120920030317/@comment-3508190-20120920060512

That sounds like you use the paragraph as a crutch. When lines are too wide it becomes difficult for the eyes to jump from the end of one line to the beginning of the next. Short paragraphs will make that easier because the whitespace offers a guideline. But that doesn't mean the paragraph length is the problem. The line length is. Long paragraphs set in proper width are perfectly readable in my experience.

Paragraph length has its own pitfalls. Too many paragraph breaks e.g. can make a text look disjointed and incoherent. Your Lorem Ipsum example proves that quite nicely.