Enlarge the canvas size of the image to create a small white border.
Change the background image to a regular layer.
Make a new layer and move it to the bottom of the layer stack.
Enlarge canvas size of the new bottom layer and fill with white
Make a drop shadow layer style on the image layer, then move the drop shadow to its own layer.
Use the Transform/warp tool to push in the center sides of the shadow, leaving the corners showing.

forum discussion: http://forums.dpreview.com/forums/read.asp?forum=1006&message=27902288