...also I just found out: After using the transform selection, only then does my contract, expand etc... options come back to life. Still not good enough though
Not sure what is going on here, because AFAIK the only way to modify a full page selection is with Border, which is clunky, and Transform Selection. The only reason you'd be able to use Contract after Transform selection would be if the transformation moved the selection in from full page.
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In CS5, if you chose Select > Select All or had the selection touching the border, the Select > Modify Commands were unavailable.
This issue is solved with today's (10/6/14) release of Photoshop CC 2014 contains a "Apply Effect at Canvas Bounds" option for the follow features:
Select > Modify > Smooth...
Select > Modify > Expand...
Select > Modify > Contract...
Select > Modify > Feather...
Users now have the option to have these commands apply to an entire selection or just the portion of the selection that is not touching the canvas bounds with the "Apply effect at canvas bounds" checkbox.
The checkbox option is remembered for each, individual selection modification option. The checkbox default is "off" on first launch and with preferences deleted.
With the "Apply effect at canvas bounds" checkbox ON, the behavior is equivalent to Photoshop CS3 behavior.
Thank you for your feedback!