Ok, this is from someone asking about it, and well, it's useful because lots of people tend to ask about it. Pictures are for photoshop, but differ only a little in paintshop, which I will also try and explain, to help keep people from being confused!!! So here we go....
Step 1- choose the pictures you want to use, for this example, I have used a picture of Gaspard Ulliel and a picture of the sky at Twilight, I guess you could say that makes this kind of Twilighty, but whatever.
If you wish to try it with the same pics first, here they are:


Step 2- One of your pictures will be the picture blending into the other in this case, Gaspard is blending into the other picture. Using the regular 'click and drag' method (make sure you're using the arrow, not a paintbrush or eraser ect.), drag the top picture onto your base picture. Like So:

Step 3- Move your top picture around, resize it by using free transform (ctrl+T) until your picture is where you want it and the size you want it.

Step 4- Change your blending options to 'overlay', overlay is the main one however, feel free to play around with the options to get different effects. I have used Overlay. You can get to your blending options through your menu (layer-->layer style--> blending options) or at the bottom of your 'layers box'...
menu-


After doing that your image should look something like this:

Step 5- Take a soft edged eraser to the edge of the top picture. Depending on the size of your product, it may be easier to use a slightly larger brush than normal. I used size 100.

Finally, you have a finished product that should look something like this:

This is only one way you can blend stuff, if you're kind of iffy on the whole background showing through the picture try what I do, creating a blank page, gathering all the pictures you want to use, erase the edges with a soft edged brush, place them the way you wish, on top of a background (solid color, or something simple like a solid color with stars, only a sliver of it will be seen most of the time anyways...) make sure the edges fade into the other pic a bit and there you have it.
Paintshop-
As I said, it's basically the same, if you are still finding difficulties converting the PS lesson so you can use it on PSP, visit
http://www.pinoy7.com/psptutorials/7/blendingphotos/p1.shtml for a tutorial specifically for PSP.
Please rate the lesson!!!
_________________
P R O U D H E A D O F J A S P E R!