Photoshop Elements comes with built in drop shadow style layers. Photoshop gives you even more control of the drop shadow style layer by allow you to adjust the light angle, spread of the shadow and other specification. These drop shadow style layers apply the same effect uniformly across the object. However most paper and photographs do not lay rigidly on a page. Even glued or otherwise fastened photographs have slight waves and bends that effect the shadow it casts. This tutorial walks you through the steps of recreating a realistic drop shadow for paper and photographs. I still usually rely on the standard drop shadow style layers for most of my paper elements but I will often use this technique on the main photo(s) in a layout.

Open your photo, drag it onto your layout and position as desired. For an introductory tutorial that covers using the move tool refer to the
Creating Your First Page tutorial.

Create a new, empty layer by going to Layer -> New -> Layer or keystroke, Shift+Ctrl+N. Click on the new layer in the layers palette and drag it below the photograph layer.
Hold down the control key and click on the photograph layer icon in the layers palette. The marching ants should now be around your photograph. The empty layer should still be your active layer. If it is not highlighted in the layers palette, click on it once to set it as the active layer.

Key 'd' to set the foreground color to black (the default setting). Click on the paint bucket tool in the tools palette and click once on the canvas inside the marching ants to fill the section with black. Get rid of the selection (marching ants) by keystroke Ctrl+D or go to Select-> Deselect.

The next step is to apply a Gaussian blur to the shadow. Go to Filter->Blur->Gaussian Blur. Adjust the slider to somewhere from 8-15 points depending upon the size of your photograph. I will be using a setting of 12.2. Click OK.

Go to Filter -> Distort -> Wave.

Enter the following settings in the dialogue box; Generations: 5, Wavelength Min: 458, Wavelength Max: 770, Amplitude Min: 1, Amplitude Max: 4, Scale Horiz.: 100, Scale Vert: 100, Type: Sine. Click 'OK'.
NOTE: As you get used to the technique you may want to adjust these settings to change the magnitude of the wave effect, but the settings above are a good starting point for photos in the 4x6-5x7 inch range.

Click on the move tool in the tools palette. Hit the down arrow key on your keyboard twice and then hit the right arrow key twice. This nudges the shadow slightly down and two the right reflecting a light source coming from the upper left side of the page (this is the most common choice of light source location in digital scrapping).

On your canvas, move your cursor just outside one of the corners of your photograph until the cursor becomes a bent two-headed arrow and click once on the canvas. Click on the warp icon in the options toolbar near the top of the workspace. The warp icon sits just left of the 'check mark' and 'undo' icons. A grid should appear on top of your photo as shown below.

You can now click and drag one or more of the corners in the grid to 'pull' the shadow out a little more from the corner. The further something is from the surface, the longer the shadow so pulling the shadow out from a corner give the appearance that the photo corner is curled slightly upward.
Play with this until you like the effect and then click on the check mark in the options toolbar. If you don't like what you do, click on the undo icon to revert back to the original shadow and try again. It takes some experimenting.

Lower the opacity slider in the layers toolbox to 45-65%. I've set mine to 60%.

Voila! You've done it.