Adjust UILabel height depending on the text

sizeWithFont constrainedToSize:lineBreakMode: is the method to use. An example of how to use it is below:

//Calculate the expected size based on the font and linebreak mode of your label
// FLT_MAX here simply means no constraint in height
CGSize maximumLabelSize = CGSizeMake(296, FLT_MAX);

CGSize expectedLabelSize = [yourString sizeWithFont:yourLabel.font constrainedToSize:maximumLabelSize lineBreakMode:yourLabel.lineBreakMode];   

//adjust the label the the new height.
CGRect newFrame = yourLabel.frame;
newFrame.size.height = expectedLabelSize.height;
yourLabel.frame = newFrame;

You were going in the right direction. All you need to do is:

myUILabel.numberOfLines = 0;
myUILabel.text = @"Enter large amount of text here";
[myUILabel sizeToFit];

In iOS 6 Apple has added a property to UILabel that greatly simplifies dynamic vertical resizing of labels: preferredMaxLayoutWidth.

Using this property in combination with lineBreakMode = NSLineBreakByWordWrapping and sizeToFit method allows easily resize a UILabel instance to the height that accommodates the entire text.

A quote from iOS documentation:

preferredMaxLayoutWidth The preferred maximum width (in points) for a multiline label.

Discussion This property affects the size of the label when layout constraints are applied to it. During layout, if the text extends beyond the width specified by this property, the additional text is flowed to one or more new lines, thereby increasing the height of the label.

A sample:

...
UILabel *status = [[UILabel alloc] init];
status.lineBreakMode = NSLineBreakByWordWrapping;
status.numberOfLines = 5; // limits to 5 lines; use 0 for unlimited.

[self addSubview:status]; // self here is the parent view

status.preferredMaxLayoutWidth = self.frame.size.width; // assumes the parent view has its frame already set.

status.text = @"Some quite lengthy message may go here…";
[status sizeToFit];
[status setNeedsDisplay];
...