How to make a thumbnail in Photoshop and make it look good the easy way:
1. DON'T USE THE RECTANGULAR MARQUEE TOOL!
2. Use the cropping tool
3. Set the exact pixel dimension you want for width & height. Make sure resolution is set to 72 px/inch.
4. Crop the picture. Voila! No need to resize, PS takes care of it all.
5. Sharpen if needed.
6. Save for web (alt + shift + ctrl + s). Tweak the quality slider until you have a good balance between size and quality, something around 50% should be good.
