#2) verb. To "photoshop" an image is to generally merge or edit the picture's qualities, typically with Adobe Photoshop. Has now crept into common usage to describe any images (especially photographs) that've been edited (This term was originally used in reference to Photoshop.)
Other guy: "You *brought* yours? Damn man, I just d/loaded a hacked Photoshop Warez from Kazaa. w00t!"
V. - To photoshop is to edit an image, or manipulate it to look different, usually used when a picture looks totally different from the original version.
V. - I just photoshopped that image to look like it was sunny.