I am using Photoshop CS3, but it can also be translatable for PSP. Have your pictures ready! or you can pick the one's I will provide for you.

1. Make a new image any size. I usually make it big enough to overlap the pictures. I used size 700×500

2. Get the 2-3 or more pictures you would like to use and paste them to your new image you created. I only used 2 but I can add more later on. Lost? Look here for my example. I resized Layer 1 because it was a bit to big.

3. Next, zoom in the image. I zoomed mine to about 120%. Set which layer should be on top and on the bottom.  This is where your Lasso Tool should be. Have the Lasso Tool settings the same.

4. With your Lasso Tool, start tracing around the image. Look at this image. Where you see the red outline that is what you erase. But! instead of using the Eraser Tool , you have to press the Delete Key a few times. I usually press between 2-3.

5. Your top layer should end up looking like this after hitting the Delete Key 2-3 times. See the red marks around the top layer? WIth that you can get your Eraser Tool and erase it off! Simple as that.

6. After you’re done with that, this is what it should end up looking like. Now you can cut the Image out and make it any size you want. I ended up with size 680×440

7. Add effects, brushes, colors, textures etc and you’re all done!

This is what it ended up looking like, after I added all the effects and such.
Clicky here.