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select the circle/ square marquee tool.... and select some of the picture, making sure to leave room around the edges (I suggest 25%). Then goto select, feather, and choose something like 10-15pixels. Hit 'ok.' Then choose, select, inverse, and move the mouse onto the area you want faded.... now hit delete. You should see the nice 'fade.' Remember to set your background color BEFORE you do this, as this will fade from the picture to the background color. This is the easiest way, and I use it all the time. If you need help I can take a look at the picture.
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If you know the enemy and know yourself, you need not fear the result of a hundred battles.
If you know yourself but not the enemy, for every victory gained you will also suffer a defeat.
If you know neither the enemy nor yourself, you will succumb in every battle.
-Sun Tzu
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