That is a badly cut PSD, most of the times I cut my own PSD's with the eraser/Marquee tools. You could have done alot better than this, it's really distorted. If you are going to cut a PSD then:
1) Zoom into 300% or 500% to get a perfect result.
2) Delete some tricky parts of the Image using the Marquee tools
3) Use the eraser tool only for cutting PSD's, others don't really work well!
4) If the background is of a single color, use the Magic Wand/ Auto Selector (CS3)
I have cut many PSD's using these basic techniques, and trust me... the result is perfect; no matter how distorted the background is!