It depends on the medium into which you plan to put the text that has been entered.
If you plan to spit it out onto your website somewhere else, then you'll want the newline characters to turn into <br> and <p> tags. The PHP ereg_replace function is handy for this.
$newtext = ereg_replace("\r","",$newtext);
$newtext = ereg_replace("\n\n","</p><p>",$newtext);
$newtext = ereg_replace("\n","<br />",$newtext);
If you plan to do something else with the text, then you'll need to consider a different solution. Let me know what you have in mind and I'll see what I can do to help.