IIRC I've purchased most of the stuff I've used here:
http://twopeasinabucket.kaboose.com/digital.asp . If you google "digital scrapbooking" you'll get plenty of sites that sell "supplies" and offer tutorials. If you scrapbook you'll see that things are organized in a similar way. Usually you buy and download a kit that has several different coordinating papers and embellishments in jpg format. You then pull them into your photo editor (I use Photoshop Elements 4.0) and use layers to create the layout. It's fun because you can resize things and use them in all kinds of different ways--for instance, the snowflakes that I used as frames in that first card were really little embellishments with initials in the center. I'm sure I'm not explaining it very well, but it's lots of fun and not as difficult as it sounds.
When you're finished with the card you just save it in jpg format and upload it to Shutterfly or whichever service you want to use.
Check the sizes available before you make the card though so you'll have the right aspect ratio. I think Shutterfly's cards are 5x7.
) to use for the card. 
I've done mine free-hand so they are by no means perfect. Here are mine:
