There are many free websites online that allow you to upload images to incorporate different things such as other clipart, text, text boxes, etc.. Or just for mounting on other predefined images. Here is a small selection of the best websites to morph photos.
WriteOnIt : This is absolutely a fun site to check out. It allows you to include your image on posters, magazine covers (with your own head - like the one above) and other photomontages. Also, there is no need for a registration.
Hairmixer : This site allows you to swap faces and hair. It has an option for you to upload your own photos or use the ones available online too.
Kyolo : This is a pretty basic site. In it, it only allows you to add text balloons to images. This can be useful at times when you want to make fun of your pals. Also you need to register.
PhotoFunia : The best site I must say!! Kinda different website which allows you to place the image you upload into an integrated picture. The final work can be easily downloaded or created as an avatar without registering.
FunPhotoBox : Very similar to the above website, but with other effects, and new listings every week. It also has a great feature to allow you to select the area of the photo you want to show. Also, no registration is required.
Ransom Note Generator : This website creates a text composed of letters cut from a magazine. You can place any image as a wallpaper and see the fun around your desk. No registration is required.
BigHugeLabs : This website offers many options. You can easily add text balloons, motivational posters, "warholizar" your photo, given to, and so on. It has a wide range of possibilities, but requires registration.
FaceInHole : classic put your face on the body of another kinda site. Many options and also up to date.
AutoMotivator : You know those posters that are in some offices with motivational phrases supposedly? Here you can do the same. Of course, it's more fun to parody them. Lets you save the image on your computer or directly to Flickr or ImageShack (which is very cool). This site is part of a larger one called Wigflip, which give you other options to create graphics for your website with your own text, like post-it or labels. No registration required.
Have some fun with your images and fool a few folks too!!