Resizing layers in Photoshop CS3?

Command/Ctrl + T

What @Magnus wrote opens up what’s called Free Transform. This will add resize handles to your layer.

You must select the layer you wish to resize, then press ctrl/cmd + t. This will give you those handles. If the handles don’t show, or don’t resize what you want, be sure to select all ctrl/cmd + a of the layer before you go in for the free transform.

Remember that you cannot do much of anything else with the file (filters, etc…) during the transform. Be sure to commit the change (press enter). You can still undo, if you must…

This will also activate the tool-specific menu. You can make size adjustments there if you like or simply drag the handles of the bounding box. Be sure to hold down the Shift key while you do this so the image stays proportionate.

One final note, just because this has caught me, if the layer is locked you wont be able to transform it.

Sincerely,

Captain Obvious