As you can see, the image is pretty big, so I resized it to 500x500 for this tutorial. Now, once you have pasted your image onto your canvas, go to Effects>Distort>Pixelate.

Now, I usually like to set it to 10, but you may change the number as much as you like.

There, your image is now pixelated. You may keep the image like this and add some effects, or use this as a base texture. To use this as a texture, continue reading.
Highlight the image you have now and copy it to your clipboard. Now, press and hold down Ctrl+Z until your back to your original image. Next, create a new layer by pressing Ctrl+Shift+N and paste your copied image into the new layer. Press F4 on your keyboard to bring up your layer properties and choose a blending mode. I chose "Darken" and below is my product.

You may use any other blend mode. I just chose "Darken" for this image, because I think it looked best. =]

If you do not understand something or have questions about this tutorial, feel free to email me at: adminbecca[at]twistedrose.net, remove the "[at]" and replace it with an "@".