Don't cut and paste from Word or other websites without using an interstitial paste into a plain text editor like Notepad to strip out the formatting. Format in WordPress itself or use a desktop blog publishing program like Blogdesk. See this thread for more details:
MY TIP: Do not do anything in terms of formatting in the txt file otherwise, you'll run into the same problems. When you paste into Wordpress.com, it defaults to a selection of "preformatted," change it to paragraph. Then, reformat the post as you normally would in Wordpress.com. (if you don't see these options, click the last button (the kitchen sink) button in the basic Wordpress.com editing menu (#15-- see below).