To Produce a Picture With a Soft Edge



Select the image you want. Using the Marquee tool, select the section of the picture that you want.
Under the Select Menu, choose inverse to select the area outside the section you've want for your image. Then, return the Select Menu and go to Feather. Feather is going to be sort of depending. this is a 125dpi image. I feathered it 20 pixels. You'll need to use your judgement.)
Under Edit choose Fill. Fill the image with the background colour that you want. This image didn't turn out quite as well as I wanted...it was a stock photo and the flower went just a little too close to the edge of the photo to fade fully; you can see the edges of the picture. I used the blur tool to ease the edges a little.