Cut a Picture into a Shape with Photoshop or Elements

You can give the picture a bit of added punch by adding effects to the shape layer. Here I added a stroke and drop shadow to the shape layer, then added a pattern fill layer below everything for the background.

To Add Effects in Photoshop Elements:
Start by adding the "Low" drop shadow layer style. In the effects palette, click the second button for layer styles. Then choose Drop Shadows from the menu, and double click on the "Low" thumbnail. Next, go to the layers palette and double click the FX symbol on the shape layer. The Style Settings dialog will open. Adjust the style settings for the drop shadow, then enable the stroke style by ticking its check box, and adjust the stroke settings.