In the example you show, most likely, the user did in fact hit RETURN between those lines. If you are then displaying back in HTML, the two lines will show as one since in HTML, you have to specifically break a line with an HTML element such as <BR />.

What you can do is, just before displaying the string, use PHP's str_replace() function to replace "\n" with "<br />". I think this will give you what you want.
http://us2.php.net/manual/en/function.str-replace.php