This can be done so easily in PSE .Go to Create >> CD/DVD Label , (without manually making round size photo and other stuff).
Or If you don't Like this Prepare Your can prepeare your custom photo.
1)Open your images which you want to put on DVD label.
2)Make a new file (File > new).
3)Go to your images ,select Elliptical Marquee too , make circular selection by pressing Shift key.
4)Go to Edit menu >> copy.
5)Go to newly created file and Edit>> paste.
6)For text writing ,select Type tool and write your text.