well i'm pretty much convinced that /n or any other way won't work with GD, at least how i'm attempting it.
but...or however... I did just now figure out that all i needed to do was seperate the imagestring - that is have one for each field in the form, and just position those accordingly w/in the image like this:
header("Content-type: image/jpeg");
$imgname = "calloutsample.jpg";
$fontSize = 2;
$imageWidth = 200;
$imageHeight = 80;
$distLeft = 218;
$distTop = 0;
$callout1 = stripslashes($POST['callout1']);
$callout2 = stripslashes($POST['callout2']);
$callout3 = stripslashes($POST['callout3']);
$callout4 = stripslashes($POST['callout4']);
// callout image
$calloutimg = @imagecreatefromjpeg ($imgname);
$background_color = imagecolorallocate ($calloutimg, 255, 255, 255);
$textColor = imagecolorallocate ($calloutimg, 0, 51, 153);
imagestring ($calloutimg, $fontSize, $distLeft, $distTop, $callout1, $textColor);
imagestring ($calloutimg, $fontSize, $distLeft, 14, $callout2, $textColor);
imagestring ($calloutimg, $fontSize, $distLeft, 28, $callout3, $textColor);
imagestring ($calloutimg, $fontSize, $distLeft, 42, $callout4, $textColor);
imagejpeg ($calloutimg);
imagedestroy($calloutimg);
GD is pretty nifty.