Gingerbread is the operating system update that a lot of last year's Android phones received. They were originally on 2.2 Froyo and are now on 2.3 Gingerbread.
If your phone is really acting up, try doing a factory reset. From the home screen, press Menu>Settings>Privacy>Factory Data Reset. Beware that you will lose all your downloaded apps, settings, etc. The phone will essentially be reformatted. However, if it's really acting up, you've nothing to lose.
As for the texting thing, it's a known bug in Gingerbread. The fix is from the home screen, Menu>Manage Apps>All>Multitouch Keyboard>Clear Data. Then from the home screen, Menu>Settings>Language and Keyboard>Multitouch Keyboard>General Settings>Uncheck Next Word Prediction.