Normally for type effects like this, I would use Adobe Illustrator or Corel Draw, but in case you don't have one of these programs, this is how you do it in Photoshop.

	Create a new image and then draw a circle with the marquee tool. Stroke the selection with a thin black line (EDIT...STROKE...1 from CENTER).
	Now create a new layer and place your text in the center of the circle.
	Draw a box around the middle letter and drag it straight up to the top of the circle. This is your midpoint.
	Continue to move each letter up, but now you will need to rotate each letter so it fits along the circular path. With Photoshop 3.0 click IMAGE...ROTATE...FREE, but in 4.0 use the free transform tool (CTRL+T).
	Continue to do this until all of the letters are placed around the circle.
	Now delete the layer that contains your circle, and crop your image to size. This takes a little bit of practice to make it look right, but after a few trys you should be a pro at it. This tip is the same for creating text on the bottom of the image as well.