By request, I have just created this tutorial about how to use text paths. There are more ways to use them, but I like to use them as "smart objects". This option comes with Photoshop CS3 I think, so if you have Photoshop CS2 or below, don't worry, I've added PS CS2 details in each step. Click on each image to see it bigger.
1.- Open your image. For this tutorial I've used a nice picture by Illusionistsmemories @ deviantart. IIf you are creating a layout, you don't need to save it and open it as a flatten image, just read next step.
2.- Now, place your text path. Click File > Place...
If you have PS CS2 or you have disabled Smart Objects, open in like a regular file.
3.- Either if you have or not SO (Smart Objects), you will see a box like this, just pick the path you want to use.
4.- Find a great place on your image or layout for the path. Now, look at the thumbnail, there is an symbol there... This means it's a SO. Click two times on the thumbnail and now you can edit this object in a new window. This is one characteristic of the SO's: you can edit them separately from the rest. If no SO, miss this step.
5.- A new document will appear in your Photoshop. Do not close your image or layout while editing the text path. You will see something like this:
6.- First, we will make the canvas bigger to edit the text freely. Click on Image > Canvas size.
7.- You will see this box:
8.- Forgot the first part. Look at the second part "New size". Pick "percentage" in the second box of "width" and "height". Enter 200 in each. This will increase our canvas size without modifying the text path size.
9.- Look! How big is our canvas now! Wonderful! There is a lot of space for us :)
10.- Select the text tool and click in the line of the text path you want to change. Each path is different, but you can edit any of them by clicking on the line or the text of them. In this text path, there are four text lines. Just remove the text - do not remove the layer - and enter your own text. You may change the font, the size...
11.- When you have finish to edit it (you can also add elements, different fonts and colors... Be as much creative as you want to!). Now trim the image. Go to Image > Trim. Select "Transparent pixels" and click OK.
12.- We are going to save it.
- If you are editing it as SO: Go to File > Save. Do not pick Save as... By clicking Save we are not editing or overwriting the original path or image. Photoshop will just change the SO in your image or layout.
- If you are editing it as a regular image: Go to File > Save as... Save it with the name you want, but you must save it with any file format but it must have transparent background. I recommend you to save it as PSD or PNG.
13.- If you didn't edit the image as SO, now you have to place it. Go to File > Place. If you edited the image as SO, miss this step.
14.- Our image is ready! Now you can continue edit it or adding effects or what ever you want! Happy Scrapping!