I use PS7 too. You could highlight the area around the picture and then use the filter>noise>add noise make sure it is uniform and monocrhomatic. then just play with the numbers until you have it how you like.
You could also highltight your picture (leaving somewhat of a frame) and then click to create a vector mask. This will "erase" the "frame" of the picture. then goto filter>distort>diffused glow and play with the numbers and settings until you have what you are looking for. Make sure you have a white background underneath your picture. Here is an example of that:
Not sure if that is what you are looking for, but the latter is my favorite technique.
to add snowflakes, you would have to find a snowflake brush (or create your own).
Hope that helps!