For most images I use in PowerPoint, I use Photoshop to extend the background and create more white space for type. You can only do this when the edges of the image have a nice neutral pattern background.
Stock photographers crop their images to get more interesting compositions. The result is that many images will have hard cut offs that cannot be extended. Here is my call to stock photographers: let the designers of the final products do the cropping for you and make the full version of your file available as well.
Maybe stock photography sites should do for images what they already do for vector files: offer a ZIP file for download that contains multiple items: one example crop that creates a nice thumbnail to drive sales on the site, and the original that designers can work with.
Image via iStockPhoto.
Update: Linda Lor linked in the comments to her video on how to extend images in PowerPoint without the help of Photoshop. I am embedding it here: