Well, all I've ever used is GIMP.  I know I don't use it to it's fullest extent, but I've heard other people use it as well.  I'd be interested to know what program jdm022 uses though.

On a side note, where did you get that amazing avatar?

CS3 probably has some new funky features you can use for morphing. But at least in PS7, one of the basic morph tools is Filter > Liquify. You can try playing around with that until someone more versed in morphing replies. Also, there are different techniques to achieve different effects. If you want just a simple bulge, then Liquify can do the trick. If you want extra definition, then you might have to add it in yourself using paint tools or cut&paste bodybuilder parts onto the models' heads. Good luck!

Oh that she were real.

I've only done a few with GIMP (or with any editor for that matter), but here is the general procedure I use:

[1] Separate the body parts into layers
[2] (Optional) Trace an outline of each part's warp, and make that the new mask of each part's layer.  I don't always do this, but it sometimes helps to keep everything in proportion.
[3] Use Filters->Distorts->IWarp on the parts until they fill the outline mask of each layer.  Mostly move and grow, with the "Bilinear" checkbox unchecked.
[4] Blur or smudge over any abnormal lines or shadows that result from the initial warp.
[5] Use bump maps (Filters->Map->Bump Map) for veins and extra muscle definition.  I usually just do a global layer for the veins, with the mask fading to transparent as a vein becomes less visible.  Bump maps take a little time to learn to use, but they are very useful.  Also, both vein and muscle  addition layers should use "Hard Light" or "Soft Light" as the blend method.