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new layer
bucket fill black
elliptical marquee tool*
cut*
blur->Gaussian blur (about 45, but depends on the pic)
*these steps can be replaced with the eraser tool, but you'll get a smoother circle with the marquee
Sorry about that, sometimes I get carried away. Hopefully I'll be a bit more helpful this time.
You're using the elliptical marquee tool to select the area that you want to get rid of, basically the part of the image that you don't want totally black.
Once you have your ellipse drawn go to edit->cut and then select->deselect in the drop down menu's at the top of PS.
Now back on your menu go to filter->blur->gaussian blur. and play with the slider until you like the result, your setting is really going to decide on the size of your image. But like I said, I'm guessing something around 30-60 will work.
