I just tried out the liquify tool the other day - and bam! I fell in love instantly :)
This is just so incredible fun! Take your family pictures and make your aunt Edna and uncle George look hilarious!
Take any ordinary text and turn it into an unique logo or header, or make small figures from circles etc.
This is not a step by step tutorial to make one certain effect like most of my other tutorials, but more like a tips page with a few pointers on what you can do with this tool.

You access the tool by hitting Shift + Ctrl + X or go to Image - Liquify.

This tool is truly great when it comes to manipulating photos.
Above I have shown you a couple of things you can do with it.

Picture 2: This is probably how my daughter would have looked like if the Hulk was the father :)
Just choose a proper brush and drag your image the way you want it. It's really very simple.

Picture 3: Now this is more serious. This is also made from picture 1, but this time I just wanted to make my daughter look a little more happy. And I think it turned out really well. As you can see I lifted the left eyebrow a little bit to make her eyes more open, and then I used the brush to make a little Mona Lisa smile on her. SO - as you see - this tool could be very useful in retouching your favorite photos.

Just another example for you :)
Move your mouse over the picture...

Well - I have looked better...

This tool is excellent when it somes to making special effects on text.
The "Spooky" picture below is created by using the Liquify tool to create every single effect!

The "Spooky" text is just an ordinary font that I have dragged around a little bit to make it look this way. Then I added a nice Bevel and Emboss effect and some drop shadow with the layer styles.
The ghost is made by first using the Elliptical Marquee Tool to make a circle - which I filled with white color. Then I used the Liquify tool to drag the lower parts down so it got the shape of a ghost. The mode I used on the Liquify tool this time was Stiff.
Above the background layer (the effects mostly made from the Lens flare option: Filter - Render - Lens Flare) I added a square on each side which I dragged towards the center of the image. This created a soft edge to the whole picture.
So as you see - your imagination is the limit here! Play around and discover how fun this is :)