Wraptext is a small library designed to accept "blog-style" newline-delimited text with markup, and to return a formatted document with bare text wrapped in <p> tags, splitting text nodes with double newlines in them into multiple paragraphs.
Add it to your gemfile:
gem 'wraptext'
Then parse your text with it:
Wraptext::Parser.new(your_html_fragment).to_html
This'll return your text fragment with bare text wrapped in paragraph tags, and text nodes that include double newlines split into distinct paragraphs. The primary intent was to enable parsing of Wordpress-generated post content into valid HTML documents, but because the parser is designed to work on generic HTML documents, may be used beyond Wordpress content.
Wraptext::Parser accepts a Nokogiri document, as well, if you already have an existing document you are working with. Wraptext will not modify the original document object you pass in; it will create its own internal Nokogiri document to build the new document tree from. You may access this new document with #to_doc, if desired.
simple_format is not HTML-aware, and may potentially mangle HTML in ways that you don't want. For example, it would mangle <script> and <pre> sections in text, breaking them.
Mostly because parsing HTML with regexes is almost never the right solution. Using Nokogiri ensures a properly-formed document.