Here is a neat little plugin that I use on my websites: excerpt-first-paragraph.
It does what it says, it returns the first paragraph as excerpt in your WordPress theme.
1. Download excerpt-first-paragraph.zip
2. Upload to plugins and activate
3. Replace the_excerpt in your theme with:
<?php if($pos = strpos($post->post_content, '<!--more-->')) : the_content(__('')); else : echo get_the_content_first_paragraph(); endif; ?>
Note: All images get cut out of the excerpt first paragraph.
And you are all set. No more blog entries cut off mid sentence with … Enjoy having your first paragraph as an excerpt!