I'm tired of using the Magic Wand when extracting people out of various backgrounds so I searched the web and came up with this. I am going to try it out as soon as I finish posting this. I have Photoshop CS3.
My verdict: loads better than using Magic Wand! While the initial highlight part will most likely miss out some parts, you can recover these using the Edge Touchup and Cleanup tool while previewing the crop.
The procedure (in case the above video goes missing):
Open the image
Click Filter - Extract
At the left hand side is a series of buttons. Use the topmost to highlight around the edges of the image you want to crop, forming a closed shape
Next, use the Fill Tool to highlight the entire image for cropping
Preview the image and use the Touchup and Cleanup tools to enhance the crop.
You can zoom in and out, which is handy.
There are also additional adjustments to how these tools will act at the right hand side.
Make sure that you have finished all the touchups you need before pressing the OK button. I found out that there's no turning back once this is clicked and the cropping will be executed, removing the background completely.