My bookmarks truncate, but only after many, many characters. Then you can view the full title, as well as the URL, in the mouseover tooltip.

To narrow the width of the bookmark menus:

(1) There might be an existing add-on targeted to this; I didn't search.

(2) You could create a custom style rule. One way to do this is to use the Stylish extension and add the following userstyle (create a blank rule first):

@namespace url(http://www.mozilla.org/keymaster/gatekeeper/there.is.only.xul);
#bookmarksMenu menupopup {max-width:15em;}

That works in my test, but you can tweak that maximum width to suit your needs. (1 "em" is about 16 pixels). Stylish can be installed from here: Stylish :: Add-ons for Firefox.

(3) You could create a custom style rule in the file userChrome.css, which you can add to your personal Firefox profile. I didn't test it.

You may have to add or use different selectors depending on where you want to achieve this with code in userChrome.css or Stylish.
The #bookmarksMenu selector only works for the Bookmarks menu and not for other drop down menus like the Bookmarks menu in the Firefox menu button or folders on the Bookmarks Toolbar or the Bookmarks menu button.

#appmenu_bookmarksPopup menuitem,
#bookmarksMenuPopup .bookmark-item,
#BMB_bookmarksPopup .bookmark-item ,
#personal-bookmarks menupopup .bookmark-item {
  max-width:15em;
}