I'm posting this again with a drop shadow added.
Very cute baby.
Nice site too. Lots of inspiration.
Here's how I did this.
I cloned the blanket as the background and added the fur filter in PSP. I straightened the picture and added a softener. I cloned the sweater onto the T-shirt and cloned the hand also. Then finally I enlaged the image to get a closer view. That's it.