yep, we did a bunch of these last year.
Basically what I'd do is make a new image, 2"x2", transparent background. Ctrl-A to select all, then Edit>Stroke>Inside with a white color, about 20 pixels or whatever you prefer.
Go to Edit>Define Pattern
Then on your photo/layout you go to Layer>New FIll>Pattern and choose the grid/square you just made. It'll cover your photo, looking like a mosaic. You can Scale to make it bigger or smaller as you like.
Then go to the Styles&Effects Palette and choose Styles from the left drop down box. From the right drop down box choose Inner Shadow and choose a small one from the previews. Try a few different shadows to see which you prefer.
This covers up the photo under the grid, rather than cutting it apart and actually moving the sections. If you want to do that, it takes a lot longer, but you just use the Marquee Tool with the size set in to be whatever you want. Work on a canvas that's much larger than your photo. Select one corner and with the Move Tool Shift-Arrow to nudge it over. Then put the Marquee Tool cursor inside the selection and Shift-drag it over carefully to the next uncut portion of photo and repeat with the Move Tool. Repeat until it's finished, and apply a Drop Shadow style to the photo.
post again with how you're doing, if you run into any trouble. The grid pattern is the easiest, and onc eyou save the pattern you can reuse it over and over for super fast mosaics! Here's one I made:
and a sketch idea for mosaics