AutoCollage is an advanced computer vision and image processing program which automatically create collages of your images. Face detection, saliency filters, and other techniques are used to identify interesting parts of images. Advanced object selection and blending technologies seamlessly combine these pieces into a beautiful new AutoCollage. Pick a folder, press a button and within moments AutoCollage presents you with a unique memento to print or email. If you don’t like this, Press the ‘Create’ button to get a new Collage.
You can get more info at http://research.microsoft.com/autocollage/Default.aspx
You can download a trial version from here. It’s a 30 days trial version and also it watermarks the collage with ‘Microsoft Research 2008’ . You can buy it to get regular version.
I used to do collage with Picasa but AutoCollage does a better job.As it has Face recognition also, so the images with faces will not be hidden in final collage picture. I hope this facility will be included with Windows Live Photo Gallery in future.