Which photo editing software can create this special effect?

by ynk22 - 8/12/10 8:44 PM

Can anyone tell me what software has the capability to create the special effects used in the background photo of this collage? http://www.flickr.com/photos/52978614@N06/4886654579/ (For privacy reasons, I have removed all the foreground pictures.)

I don't know the terminology for photo editing software, but I will attempt to describe the "special effects" I am referring to in the background photo at the link above. Not only do I need to be able to soften the picture, but specifically, I want to create the look of the picture being on top of the same picture, with the bottom picture resembling a frame. Sort of a 3-dimensional look - see how the edges of the top picture are rounded as though it is a thicker photo laid on top of the other one?