In photoshop, go to File -> New. This will bring up this window:
What does all this mean?
Name - you can give your file a name here if you want. If you don't, you'll give it a name when you save.
Preset - if you leave this at custom, it will let you make whatever size canvas you want. The canvas is the area that you will have to work on.
Width/Height - Here you can set the size of your canvas. For digital scrapbooking I generally work in inches, but you can change the unit of measurement by clicking on the small arrow next to "inches".
Resolution - This is where things start to get tricky. If you want to print your pages out in the future (or even if you don't) I would recommend setting the resolution to at least 200 pixels/inch. I set mine at 300 pixels/inch. This ensures that when you print it out at 12x12 inches, there will be 300 pixels for every inch, or 3600x3600. How many pixels per inch will make the picture look more or less pixilated. If you have too few pixels, you will be able to see each dot rather than the smooth picture you will see if you increase the pixels/inch.
Color Mode - Make sure this is not grayscale, then everything will be in black and white. I do all my work in RGB color.
Background Contents - Here you can set the color of the canvas. If you don't like the color you pick, you can always change it.