How to wrap each word of an element in a span tag?

You don't need jQuery for this simple task. String.prototype.replace and regex should do the trick.

I just made some simple utility functions, that wraps letters, words and lines:

/**
 * Wraps a string around each character/letter
 *
 * @param {string} str The string to transform
 * @param {string} tmpl Template that gets interpolated
 * @returns {string} The given input as splitted by chars/letters
 */
function wrapChars(str, tmpl) {
  return str.replace(/\w/g, tmpl || "<span>$&</span>");
}

/**
 * Wraps a string around each word
 *
 * @param {string} str The string to transform
 * @param {string} tmpl Template that gets interpolated
 * @returns {string} The given input splitted by words
 */
function wrapWords(str, tmpl) {
  return str.replace(/\w+/g, tmpl || "<span>$&</span>");
}

/**
 * Wraps a string around each line
 *
 * @param {string} str The string to transform
 * @param {string} tmpl Template that gets interpolated
 * @returns {string} The given input splitted by lines
 */
function wrapLines(str, tmpl) {
  return str.replace(/.+$/gm, tmpl || "<span>$&</span>");
}

The usage is pretty simple. Just pass in the string to wrap as first argument. If you need custom markup, pass it in as the second argument, while $& is replaced by each char/word/line.

var str = "Foo isn't equal\nto bar.";
wrapChars(str); // => "<span>F</span><span>o</span><span>o</span> <span>i</span><span>s</span><span>n</span>'<span>t</span> <span>e</span><span>q</span><span>u</span><span>a</span><span>l</span> <span>t</span><span>o</span> <span>b</span><span>a</span><span>r</span>."
wrapWords(str); // => "<span>Foo</span> <span>isn</span>'<span>t</span> <span>equal</span> <span>to</span> <span>bar</span>."
wrapLines(str); // => "<span>Foo isn't equal</span> <span>to bar.</span>"

It's gonna be a little more complicated than that. You're gonna have to find out all the words and re-append them to your element, wrapped in a span.

var words = $("p").text().split(" ");
$("p").empty();
$.each(words, function(i, v) {
    $("p").append($("<span>").text(v));
});

Live example