If your database string contains the \n character which is, I think ACSII-10 or chr(10) in php talk, then it should show in the text area.
You have to think about your strategy.
If you're going from database to textarea and back to database (with no previews), you should be able to not replace \n's with '<br>'. BTW the proper XML method is '<br/>' but that's another story.
See the attached code:
<?php
//i didn't connect to a db so heres some text with newlines in it:
$data= "I am writing a line
now I'm writing a new line.
and another";
?>
<form name="form1" method="post" action="test.php">
<textarea name="textfield" cols="45" rows="5"><?php echo $data;?></textarea>
<input type="submit" name="Submit" value="Submit">
<!-- This worked fine for me!-->
sam fullman
Compass Point Media
</form>