To start off we'll need an image, ill be using a 800x600 image. Step uno, use a black fill to color the background black.
Next, create a new transparent layer and find a nice rather blocky font, I used Sans Bold since im lazy and I already had it selected. Select white as your primary color and type in what ever you want, make sure the font size looks good with what ever image size you chose, I used size 100. After you're done you'll need to merge the text layer down into the transparent layer you created earlier.
Now you'll need to go into Filters, Distort, Whirl and Pinch. Set the values to the ones in the screen shot, or change them to suit your image size/needs.
And now go into Filters, Distort, Iwarp. Keep the settings on default and select the “Move” option, play around with it until you get something vaguely resembling what mine looks like.
Go into Filters, Blur, Gaussian Blur and apply a blur of 10.
Now take your smudge tool and select a soft fuzzy brush, just smudge the text upwards so that it resembles flames. After you're satisfied with you're results, merge the transparent layer down with the background and go to Colors, Color Balance. Set the values as red 65 and yellow -55 throughout. Your final result should look something like this.
You can probably get yours to look better than that if you put more effort into yours than I did mine, but that's how to make flaming text in GIMP.