Welcome to WebmasterWorld, you'll like it here.
Do a search for "photoshop tutorials" on Google, you'll find many sites that will help you.
Take a picture of someone you don't like and mess with their head using the Liquify tool.
At least this is fun and provides an interesting way to perform your first task.
I started on Photoshop back in version 2... hehehe. I can't even imagine how mind-boggling it would be to start from scratch with 7!
But Shanz is definitely on the right track. 90% of what I know about Photoshop, I learned by playing with it over the years. Open up existing images, and play with them. Find out what all the filters do. Then open up a blank canvas, and find out what the different drawing tools do.... etc., etc.
Check out your local bookstore's computer section for any tutorial type books they might have also... a good printed reference is sometimes the key to figuring out a tough problem.
The key difference between Photoshop and simpler graphics packages is that a Photoshop image can have multiple layers, much like a series of clear acetate sheets overlaying one another. You can manipulate different layers independently, so for example you can move one layer around without moving anything else, you can rub out part of the image on one layer without affecting the others and you can apply those artistic filters to individual layers. If you haven't got the Layers window open, go to Window/Layers and you'll find it. There's a little button at the bottom to create new layers and if you paint a line, it paints it on the currently highlighted layer.
If you save your picture with the layers still separate then you can only save it as a .psd (Photoshop document). To save it as a normal image file, e.g. a .jpg, you need to merge all the layers by going to Layer/Merge All.
Once I got the hang of the layers thing, I could do lots of other things without getting too confused, like drawing lines, filling in shapes and playing with filters.
Definitely get into the habit of saving in .psd format that way you can re-edit the image you created from the time you saved it.
I cannot count the amount of times that I have lost work through either forgetting to .psd or crashing.
I think everyone gets confused by the vast array of options, in the beginning. I certainly was, and photoshop has jumped in leans and bounds since then (v4)
They should be a good start to helping you understand the tools and filters better. I'll see what other links I can root up later, possibly.
i think my version came with a built in tutorial thing so that may be worth a look. I agree with John_Caius about the layers thing, if you get your head around these things will be a lot simpler..
I do this with each new release of Photoshop. (The Help section of the program is basically a tutor.)
Start at the top of Help>Contents which usually says something like "Looking at the work area" and just plain read the entire thing from top to bottom and do the instructions as explained until you have gone through each help topic.
You will be fairly proficient in just a few days!