This is a rather different effect from the basic photo effect. In fact, it creates a sort of pixilated and digital feel, sort of like a webcam image. Well, see how you like it. Here is a picture of the original photo:

Choose a photo that you would like to create an effect on. I would believe that this is more suitable for pets or animals, rather than human faces.
1) Firstly, open two windows of the same, original photo in Photoshop.

2) Then, on whichever window you prefer, go to Image > Mode > Indexed Color and click Yes when it prompts you with the flatten image thing.

3) Select Uniform for Palette, 8 for Colors, Diffusion for Dither and between 70 to 90% for Amount. Check the Preserve Exact Colors box and click OK.

4) It will then give you a photo with dots and visible pixels. Copy that image into the second window (with your original non-edited photo), above the original layer. I named the layer "new layer".

5) When you have done that, blend the top layer with the bottom one by selecting "Darken" or "Overlay" or any other effects you would like for the "new layer".

6) That would create a darkened final photo with some visible dots. But that's the effect we want to create, although there is still one final step to make it look even nicer. On the bottom/original layer, right click and select Duplicate Layer. Name the layer "Middle Layer" and it should be in between the "new layer" and "Layer 0".

7) Select the "middle layer" and go to Filter > Sketch > Conté Crayon.

8) Then again, choose "Overlay" for the layer options, or any other effects you would like.

9) It's almost done...go to Layer > Merge down and all 3 layers would be merged into one. As I said, this is useful for further colour balance/contrast/brightness edits. When you have merged the 3 layers, go to Image > Color Balance.

10) Select the best possible Colour Levels you fancy and then you're done! Here is an example of the finished product that followed exactly the steps written on this page. Nice cat huh?