Most lens-makers offer a soft-focus lens, and you can get screw-in filters to achieve the same effect. Or, you can mimic the effect in the digital darkroom. There are a few advantages to Photoshop: you can decide after the fact which photos benefit from the effect, and you can apply it selectively - avoiding the eyes and hair in a portrait. This article shows how to create the effect with post processing.
Below and at right are two photos, with and without digital soft focus. Click on each image to it before and after applying soft focus.
The original image has more contrast; it's darker, but only in the shadows and around the highlights. ( The gamma is almost unaffected - look at the out-of-focus background on the right edge of the frame. ) The first model's eyes stand out as the only true black in the photo. Also, the highlights are "smeared" to create an angelic looking fog around the model. With photos that look more like a dermatology exhibit than a portrait, the effesct smooths out the photo, removing a little bit of detail, making pores in the skin less noticable. Finally, the overal photo is given a softer, more diffuse look.
Creating a soft focus image is easy enough, and the process can be automated if you allow for a couple of prompts. ( In fact, a Photoshop Action can be downloaded at the end of this article. )
At this point, you're done. Because the changes were made to a duplicate layer, you can turn the effect off at will.
A small dose of soft-focus can be extremely useful in portraiture, especially when there's too much detail in the pores of the skin.