1.) To ensure that your object is always outlined and ready to be transformed is to make sure your Show Transform Controls option is checked. In Photoshop CS2 and 3 it is located along the top when your Move tool is selected. If you are unable to locate this in your version of Photoshop, you can always press CTRL + T on your keyboard... this will activate your transform controls as well.
2.) The most IMPORTANT thing is to always hold down your shift key when resizing an object. This will ensure that it keeps its proper proportions. Otherwise, your object (or worse... your PHOTO!) will appear streched or flattened.
3.) It is important that you only use the corner transform controls when resizing your object. If you use any of the middle ones, it will make your image appear stretched or flattened whether you hold the shift key or not.