void loop()
{
potval1= analogRead(potpin1);
String str1= String(potval1);
output= (str1+"\n");
Serial.print(output);
delay(250);
}
The String constructor is converting potval1 to a string, and wrapping it in a class. Then, the second constructor is creating a copy of the original string and appending a carriage return. Then, the Serial.print() function needs to unwrap the String object to get to the string to send.
Serial.println(potval1) will convert the value to a string and append a carriage return and line feed without the need to piss away resources on the String class.
The parseInt() method will stop reading when it sees either the carriage return or the carriage return and line feed, so there is no advantage with not sending the line feed.