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:
Double click in a blank area of the layers palette for the layer where you want to apply the effects. The Layer Style dialog will appear. On the left side, click on the effect you want to apply, and adjust its settings. Use the check boxes to turn each effect off or on.