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It's not a problem of Guake, it is how your terminal title is setup. The new version of Guake respects terminal title from the shell. I bet that you are also getting same long title in Gnome Terminal. Check how to configure terminal title from your shell: http://www.faqs.org/docs/Linux-mini/Xterm-Title.html

Looks like you need to turn use_vte_titles off (set to false) in the gconf schema for guake. Otherwise you can hack custom strings or behaviour in by changing the on_terminal_title_changed function or code higher up the call stack, since it is not called consistently. It can be found in the main guake file.

I don't think tmux can do that. It should be easy to patch if you know C programming. One thing you could do is call tmux from a wrapper shell script, and let the script decide whether to exit or not. Send a signal to the wrapper to tell it to execute an interactive shell when tmux exits. Here's an untested proof-of-concept for the wrapper script: export ...

Following up on Alexandar's reply: The following two questions show how to configure a "very short" prompt shortener, which will be also respected by Guake: http://stackoverflow.com/q/3497885/946850 Abbreviated current directory in shell prompt? I use a "not so short" shortener for myself, my .bashrc contains the following: # If this is an xterm set the ...