I have experienced the same bug with LWUIT for S40. I have even filed an issue about it.But there was no response. But I managed to find a workaround for it.Try this
I am typing this out of memory.Kindly bear if the function name is slightly different.The main thing is the row count has to be set to 2 and the text area should grow by content.Setting the UIID as Label can break this trick.So be careful with that.
TextArea ta = new TextArea();
The only disadvantage is that the textarea will look a little bigger for a single line.