Start with a photo. Finish with a masterpiece.
The focus is clearly on the object you want to show. Nothing is distracting from it.
Great! Continue to the next step.
When you take a portrait it can be more interesting to show the person in their "natural habitat". Finding the right balance between showing too much and too few details is the key.
If there are just too many things that draw the viewer's eye away from what you actually want to show, try the following. Click on a suggestion to view the details.
Convert the image to black and white.
By converting the photo to black and white you can eliminate distracting colors and focus entirely on shapes. Black and white colors also allow higher contrasts, which makes the image more powerful:

Photoshop CS4 allows you to create a black and white adjustment layer (Layer > New Adjustment Layer > Black & White). Click here to see more conversion techniques.
Zoom in more.
By zooming in you can eliminate distracting details and enhance the impact of your photos. In this example image the model is hardly visible because he blends into the background:

By zooming in (i.e. you take the picture again) or cropping the shot (i.e. you use Photoshop) you get an image with more focus on the model, obviously:

If you take a portrait shot, focusing on a specific body part (especially the face and eyes) has a great impact:

Narrow the depth of field.
The depth of field (or DoF) is the portion of a scene that appears sharp in the image. Use a small f-stop number for a narrow DoF and a higher one if you want to increase the sharp area. With a narrow depth of field you can make your main object stand out more by blurring foreground and background objects, as you can see in the image below. However, this means you have to take the shot again, using a low f-stop number. Click here to read more.

Blur the background in Photoshop.
If you don't want to take the shot again, you can just select the background using the marquee tool or the magnetic lasso tool and apply the Gaussian blur or lens blur filter. Both can be found at Filter > Blur. You can also blur portions of the image using the blur tool (R).
Here's a great video tutorial how to blur the background of an image using the lens blur filter:
Darken the background.
If you don't want to blur the background you can just darken it to make your main object stand out more. Here are three ways how to do that.
Try selective coloring.
Your main object remains colored while the rest is converted to black and white. Click here to watch video tutorials of various selective coloring techniques.
Additionally, you could color the important parts of the image the way you want, leaving peripheral objects black and white. Here's how to:

1. Open the picture you want to color and desaturate it (because you can only color a greyscale image). In Photoshop, click on Image > Adjustments > Desaturate or press Shift+Ctrl+U.
2. Create a new layer by pressing Shift+Ctrl+N and set the layer blending mode to “Overlay”.
3. Now select the brush tool and color of your choice and start painting over the image. You will see that only the filled pixels are colored (depending on their brightness) while totally black and white pixels stay black and white.
4. If you have huge black or white areas and want to color them as well, you have to give them some color information first (black and white are not regarded as colors). You can do so by adjusting the levels (press Ctrl+L) and moving the black and white arrows just below the histogram. Moving the black arrow more to the right will change the black parts to a dark grey tone, while moving the white arrow to the left will change the white parts to a bright grey tone. Now your new grey areas are ready for being colored as well.
5. Let your creativity flow and try other layer blending modes as well. If “Overlay” is not enough for you, you could try “Color Burn.” Or try something totally different–with “Difference” as in the picture below. Try different opacity settings for the colored layer and different brushes. As I said above, nothing can hold you back from the total coloring madness. And don’t forget to play around with the layer opacity setting if you prefer more subtle colors.

6. If you’re not satisfied with the colored image, just delete the layer you created in step 2 and start over by creating a new one with Ctrl+Shift+N.
TIP: This technique is also useful if you want to change the eye color in a portrait ;)
Remove tourists (or other moving objects) with Photoshop.
I minimized the distractions. What's next?