(Commutative) diagram with long labels on vertices

You can specify the size you want the bottom label to take up:

\documentclass{article}
\usepackage{xypic}

\begin{document}

\[ \xymatrix { longtexthere \ar[rr] \ar@{-}[dr] & & longtexthere \ar@{-}[dl] \\ 
&*=<1cm,1cm>{reallyreallylongtexthere} & } \]

\end{document}

Although you have asked for a XYpic solution, and have obtained one, here's an approach in TiKZ. The main virtue of this (aside from the simplicity of syntax) is that you don't have to specify any node lengths by hand.

\documentclass[10pt]{article}
\usepackage{tikz}
\usetikzlibrary{calc,positioning}
\begin{document}

\begin{tikzpicture}
    \node (a) [draw, rounded corners] {%
              this is a very long label for a node};
    \node (b) [draw, rounded corners, right=of a] {%
              this node has a very long label as well};
    \node (c) [draw, rounded corners] at ($(a)!0.5!(b) + (0,-10ex)$) {%
              this node has an especially long label which overlaps the other two};

    \draw [-stealth] (a) -- (b);
    \draw (a) -- (c);
    \draw (b) -- (c);
\end{tikzpicture}
\end{document}

Here's another Xy-pic solution: When beginning an \xymatrix you can specify the column and/or row spacing. Setting the column spacing to a negative value does what you need. We do that by adding @C=-2em between the \xymatrix command and the opening brace:

\documentclass[12pt]{article}
\usepackage[all,cmtip]{xy}
\begin{document}
\thispagestyle{empty}

\[
\xymatrix@C=-2em { longtexthere \ar[rr] \ar@{-}[dr]
  && longtexthere \ar@{-}[dl] \\ 
  & longtexthere & } 
\]

\end{document}

That produces: