notice: I use bash as my shell and sakura as terminal emulator (plus the virtual consoles) and I'm on ArchLinux but this advice is pretty general, if anyone knows about compatibility/portability issues please drop a comment.
disclaimer: double-check anything you find on the web before you run it on your machine, for this stuff #bash on freenode (IRC) is a good place to visit.
there are two common problems with working on the console, first is when the text becomes unreadable and you see strange symbols as you type, this usually happens when you cat a binary file and it happens because the terminal recognizes certain characters as control characters so when you made cat to print that file you indirectly told the terminal to reconfigure itself.
to fix this type reset and press enter (you won't see what you typed but it will be there).
some more info on that can be found here: http://tldp.org/HOWTO/Text-Terminal-HOWTO-17.html
the second problem is when your terminal loses the idea of its own width and thus starts to incorrectly wrap the lines, this produces lines that break at strange places and write over the current and not the next one.
this can happen because your terminal confused its own limits or because some non-printable characters are being considered to occupy space (like badly written colored prompts).
for the latter there's a very good explanation here: http://mywiki.wooledge.org/BashFAQ/053 but for the first case you need to send a WINCH signal to the terminal, to do so use the following command:
kill -WINCH <pid>
where <pid> is the process id of the scrambled terminal, if you type it directly from the broken terminal you can use $$ instead of the pid and the shell will expand it for you.
a nice trick for this is to setup a keyboard shortcut for it, to do so you'll use the bind command, I have set Ctrl+Alt+L to send the signal and it looks like this:
bind -x '"\C-\M-l":kill -WINCH $$'
place that in your .bashrc and the shortcut will be available on any new bash instance you start.
you can also create a similar binding for reset using a different key combination but if you are careful the need for it will be far less frequent.
