I've just started using this technique for watermarking photos, like the Carousel picture in the previous post. If you've only done photo retouching with Photoshop, this technique opens up the whole new world of text rendered as vector objects, paths, and all those layer styles and options like drop shadow, bevel, and so on. Until you lay down some text on a picture, all those things don't have much use.
I've saved my original watermark as both a custom shape, and as a single layer in its own file. The custom shape can easily be stamped onto any picture, while the layer can be dragged from the layers window onto another picture (carrying along all the layer options).