-Select your custom elipse tool (appears under the type tool). Make sure you've chosen "Path" up in the options menu (the middle icon in the left-most section on the options bar), then make a circle of the size you want. You'll see a line that's just sitting there, that's good.
Note: If you want to make any other type of path text, the steps are basically the same: use any of the custom shape tools, or draw your own path.
-Select your type tool, make your font, size, etc. selections, then click anywhere on the path. Where you click will be your starting point. If your text is left aligned, that will be the left-most point. If you're doing centered text, the exact OPPOSITE of the circle will be your center, and where you first clicked is where the END of the text will be (a little confusing, that, in my opinion).
-Type your text. You can adjust by adding spaces at the beginning or end, or even just nudging it a bit using the alt+(right/left)arrow key.
-In your paths palette (usually in your layers box), click anywhere NOT on the path layer--that will deselect your path so you don't see it (and also so it doesn't copy when you do ctrl+c).
-You should be good to go!