photoshop elements 2 is good (thats what i use) because it has almost as many features as photoshop 7 but is $600 less.
@powerfulwicka, the other thing that really helps it look like one picture is feathering which is in both psp and photoshop. i almost always use it when im putting more than one pic in a banner. let me know if you need any other help with photoshop.
@buffyuker, you just have to open the blank banner image and the jpg image and select all or use the lasso (i like the magnetic one) if you just need a selection and feather if you want (selection----> feather) then go to edit----> copy. if it's still not working, you can pm me.