Another way to get rid of the white edge left (only works if there is no true white in your photo) is to right click on the photo, click properties and then under the first tab make white the transparent color and increase transparency to 100%.

Paint on edge in mask mode is my favorite method as well, though.

Oops, almost forgot to mention that I like to make a ripped edge using the eraser tool - it takes a bit of practice but you can get some lovely results with it! I especially like to do that when working with a semi-transparent "vellum" layer.