The idea is to create a polaroid effect with GIMP, like shown here. Many ideas are out to do this in photoshop, the work in GIMP is similar.
It's not as tricky as it sounds; some transparency issues are somewhat made easier in the meantime. So let's see
- Create a new image, here it's 300x300
- In the selection tool select rounded corners with 5px radius
- Copy the selection
- Paste as new image
- In the "Filters" menu, select Light and Shadow, then Drop Shadow. Make both offsets 5px. This filter creates the necessary Alpha layer - else it would take some work to do that!
- Lock pasted image and drop shadow layer (just for safety reasons, in case you want to move them around)
- Load the image you want to paste into the picture
- Rescale to 250 pixels by whatever it produces
- You might consider an "Unsharpen Mask" with 1 pixel
- Select all of the picture, copy it.
- Back to the frame: Paste as new layer
- Place the caption, maybe rotate the text layer
- Save as .gif