Hi Mike,
This method works most of the time for me... (using WF 1 or 2)
1)Create the curve on a plane on which you want the text to follow.
2)Project the curve onto the cylindrical surface.
3)Create a new sketched datum curve, this time, however, sketch the text. Select the "follow curve" option, and reference the projected curve.
4)Use the Edit-->Wrap command instead of projecting the curve. Wrap maintains the letters' proportionality (more or less) as they follow the surface.
5)Use the offset tool & select the Expand or Expand With Draft option.
6)Create a NEW sketch when it asks you for a sketched region. Use the same plane as the one you just sketched the text on. In the new sketch, you need to select the Use Edge tool, and select each loop created by the wrapped datum curve. (you might want to hide the original planar curve with the text).
7)Make sure the side surface is normal to the surface itself, and not the sketch.
This works somewhat haphazardly. You will run into problems when the text is has to go more than 180 degrees around the cylinder, or when the wrapped text starts to overlap itself.
Sometimes to make this work I need to do it a few times to capture text at incremental angles.
The Edit-->Wrap command sounds like its what you need. If this method here doesn't quite do it for you, try experimenting with what the wrap command is capable of.
Hope it helps.
-Mark