You mentioned in your comment that you've switched to the array syntax, so this may not be helpful to you, but in case anyone else cares.
I was able to replicate the issue - passing "Line 1 Line 2 Line 3" (two spaces between each value) wasn't populating my address field as expected. After a bit of fidgeting and comparing with how address fields are formatted when I export my MailChimp list to a CSV file (in the app), it looks like the API call is expecting five values, each separated by two spaces.
So, to make the original code work, send an array like so:
$address = array('Line 1', 'Line 2', 'Line 3', 'Line 4', 'Line 5')
I imagine this five value syntax is to ensure it fills the Street Address, City, State, Zip, and Country fields, for the Address.