So, actually there are some cool website to do that like http://tiltshiftmaker.com/ or http://labs.artandmobile.com/tiltshift/ and you can have last one for your iPhone too!

But we want to make things difficult (not that much anyway ;p) and make it from scratch!

1) Open you Photoshop or Gimp application

2) Choose and open a photo you think it will fit for miniaturizing itself. I choosed my shot from Umeda Sky Building, Osaka (Japan). Actually really old shot and not in a high resolution.

3) Create a Layer Mask, or simply we can use quick mask just pressing Q, so we don't need to create any mask layer.

4) Now,we are going to select which part of the picture will be blurred. To have a smooth effect for the blur, we can choose the gradient tool (pressing G) and then click on the fourth icon along before the Mode drop-down (see picture for details)

5) With the gradient tool on, we draw a vertical line starting from the center of what we want to remain in focus and as long as how much in focus we want. And it will be painted in red (actually it just a mask, so we didn't paint anything!)

6) Let's exit from Quick Mask view by pressing Q again and we can see that the red painting has disappeared in favour of a selection.

7) We need to blur that selection. Let's choose Lens Filter from Filter->Blur->Lens Filter and you can freely play with the setting. I advice you to take Radius=from 20 and 60, Blade Curvature=0, Rotation=0, Brightness=from 10 to 35, Threshold=254, Amount=0.

I used 50, 0, 0, 35, 254, 0 and here is the result:

8) Deselect by pressing CTRL+D or simply clicking on the picture with Selection Tool ON.

9) Let's try to have a more Plastic look by saturate colors by going Image -> Adjustments -> Hue/Saturation and boost the Edit:Master Saturation=from +20 to +50, i did +50

10) Give a bit more contrast with an Unsharp Mask or by going on Image -> Adjustments -> Curves and have a half S curve like that:

Here is my result, its an old 2mpx picture, so the more details you have, the better the result will be.

If you enjoied it, please share it!^^