I had the same problem actually – I disabled all the styles bar the jqGrid.css and it still occurs. I can't for the life of me see what's wrong… Firebug reports the cell as having the correct overflow setting.
I tracked it down to this:
table { table-layout: fixed }
I had removed this property because it (for some reason) prevented the display of a right-side border on the table.
Next issue… getting the damn border to display!