FIRST OF ALL, I KNOW THIS THREAD IS OLD, BUT PEOPLE LIKE ME KEEP VISITING FOR INFORMATION.
Ok, honestly, I'm going to give you excellent tools. Well at least as a web designer I use them a lot because they let me accomplish things easily especially rounding corners on pictures or making them circle.
If you want to round corner on your pictures you can go to Round Pictures
Love this tool 100%
Check this Photoshop Video and Text Tutorial.
To create circle images this Houston computer repair company has a special tutorial tutorial for Photoshop CS3.
To check the tutorial click on this computer photoshop blog.