1) Open all the pictures you want to use in your scrapbook collage in Photoshop. Create a new canvas the size you want your scrapbook collage to be. (I generally open a new file 3600 px x 3600px (12ins x12ins) with a resolution of 300 pixels/inch.) Drag all your pictures onto the new canvas and move them using the move tool to more or less where you want them to end up.

2) Starting with one of the picture layers select the lasso tool (L) and draw a loop around the part of the image you wanted to keep, usually the person's face. Make sure the layer with the selection is active and click the "add layer mask" button on the layers palette. This hides everything in the active layer that was not selected.

3) Making sure the mask is active (click on the mask), then blur the mask by Filter->Blur->Gaussian Blur. Adjust the slider until the edges of the image are blurred.(Around 20)

4) With a large soft-edged (size 50-80) opacity at around 20% and foreground color black, paint on the mask where the rectangular edges still show, erasing them. Fine tune the amount of the original image you want to show by painting on the mask with black (to erase) and with white (to bring back).

5) Repeat the above steps with each picture layer. Try to leave as much of the original backgrounds as possible without hard edges. The edges of the pictures should be semi-transparent so that they blend with the neighboring layers smoothly.

6) Move the pictures around as needed to please you. Fill any gaps with other pictures or resize the originals. When you are satisfied with how your scrapbook collage looks at this point go on to the next step.

7) With the top-most layer active, press control-A to select the whole scrapbook collage, then shift-control-C to "copy merge" and control-v to paste a flattened version of the collage as a new layer on top of everything else. Then start apply filters. You can u se any filters that you want so experiment. Examples of filters you might use are Brush Strokes -> Angled Strokes, Noise -> Add Noise, Blur -> Motion Blur, or the distort and art filters. The objective is to abstract all your backgrounds. Don't worry about what it does to the faces, they will be fixed in the next step!

8) Add a mask to the filtered layer, and using a large soft brush (100) at opacity 20% airbrush start brushing the faces back in by painting over them on the mask in black. (Make sure the mask is selected before starting painting by clicking on it.) If you bring back too much, erase by switching the paint color to white. Paint using black and white until you are pleased with the results.

9) Adjust the opacity of the filter layer and try different blend modes (such as overlay or screen) to pick the best settings for your scrapbook collage.

10) Just add text if desired and you are finished your scrapbook collage!