I use the full version of Photoshop but I think PSE has the same basic tools so this tutorial should be able to translate into both programs.

I use two different techniques to get rounded corners on my paper. There are different ways of doing both, depending on the person, but these are how I do it.

Blurring and adjusting levels

1. Have the paper you want to use open in Photoshop or PSE
2. Take your rectangular marquee tool and make your desired shape, do not deselect.
3. Make sure your Layers Pallette is on your screen and click on the Channels tab. Make a new Channel and keep the defaults. Your paper should look black now.
4. Fill the selection with white and deselect the shape.
5. Now blur the shape with a Guassian Blur of about 50 or so...you can experiment with how much of a rounded corner you want when you get the hang of doing it this way.
6. Now we need to adjust the IMAGE > ADJUSTMENTS > LEVELS. Bring your left and right slider for the INPUT levels to the middle so that all three are in the middle. You should see your shape getting crisper and the corners should be round now.
7. Hold down your CTRL key and click on your "Alpha" channel to select the new shape
8. Click back on your Layers tab and click on your paper layer. You should see the selection of the shape you just made.
9. Now go to SELECT > INVERSE and hit delete. You should be left with your paper selection with the rounded corners!


Custom Shape Tool

1. Have the paper you want to use open in Photoshop or PSE
2. Go to your tools and click on the Custom Shape Tool (looks like a squiggly paint splotch) At the top of the screen you should now see a variety of shape tools. Select the Rounded Rectangular tool.
3. Insert the radius you would like (from 1 - 100) The higher the number the more rounded the corner will be.
4. Now draw your desired shape on your paper. The shape will automatically fill with a solid colour but don't worry about that.
5. On your layers pallete you will notice a new layer was created above your paper layer. CTRL and click on this layer to select the shape and then click the trash and say OK to deleteing the Vector Mask.
6. Now your entire paper should be one solid colour. Click the trash can again and say OK to deleting the layer "Shape 1"
7. Your original paper should be up on your screen now with the selection. Now just go to SELECT > INVERSE and hit delete and there is your rounded corner shape.