The main idea of this tutorial is that to wrap text in Photoshop, either around or inside a shape, it only works if you have a vector shape that creates a path. For pictures, you will need to create a path so you can make the text follow it.
Wrap text around a shape
1. Let’s start by drawing a shape. You can draw it yourself with the Pen Tool or use one already made by selecting Custom Shape Tool from the Toolbar or keep Shift pressed and hit U several times until you see the Custom Shape Tool activated.
2. After drawing the shape, activate Horizontal Type Tool from the Toolbar or press T and select the Left Align Text on the Properties bar. On the Layers window, click on the little thumbnail of the shape to select it.
3. Put the mouse cursor at the edge of the shape, where you want to insert the text. You will notice that the cursor changes its appearance, announcing that you can start to write there, along the shape. Click and write your text. The text will follow the shape.
Wrap text inside a shape
It’s pretty much the same thing, only that now, when you need to insert the text, put the mouse inside the shape until the cursor changes its appearance and then click to insert the text.
If your text doesn’t show up good then you should change the text alignment on the Properties bar, to Center text.
Wrap text around a picture
Let’s say you have a round .png image like the one below and you need to put some text around it.
You will need to draw a path near its edge. You can make that either by using Path Tool or the Ellipse Tool, since the image is round.
1. I will use the Ellipse Tool because it’s more suitable for the image I have. Select it on the Toolbar or press Shift then U multiple times, until you see it select it. If you press only U, it will probably activate other shape, the last used to be more precise.
2. Then, on the Properties bar, activate Paths.
3. Draw the ellipse around the image, and keep Shift pressed while doing it so that it creates a perfect circle, just like the image we have. If the circle doesn’t perfectly surrounds the image, move the image so it fits well inside the ellipse.
4. Go to Paths tab where you will see that a path has been created for the ellipse. Click on it to select it. Go back to the Layers palette, put the cursor near the edge of the ellipse until it changes appearance and click to start writing.
For text inside the image I guess you’ve already figured it out: click inside the ellipse and write what you want.
In conclusion, to wrap text around or inside an image in Photoshop is not so hard if you know how to make use and take advantage of the shapes or the Pen Tool.