I was trolling google for a good way to change the edges of my pictures today, when I came across this tutorial, which enabled me to convert the following picture from this:to this:
I found it helpful to size the image density down to 120 px/inch, and feather my selection of the picture by about 15 pixels. This made the edge softer for distressing.
Also, that tutorial is a great way to give digitally scrapbooked paper a torn-looking edge. And you can do the border in any color you want. I chose white, but I could have done black, or the pink from Grace's coat by using the eyedropper tool to pick the color out before using the paint bucket tool.