Ss there anyway to select a section of an image in Photoshop and drag it to resize. You can do this in Microsoft Word and other programs, so there must be way to drag and resize in Photoshop.
Use the marquee tool (hotkey M) to select the portion of the image you want to resize, then use the Transformation tool hotkey: Ctrl+T (somewhere in the edit menu, but I always use hotkeys). This will bring up the transformation tools you want. When you are done, press Enter, or the check button on the option bar along the top.
Also, if you want the section you are resizing to not deform or stretch, hold down Shift while resizing will constrain the aspect ratio of the image.
Oh, you want to edit the entire image. That was unclear to me when I posted my first answer.
To resize an entire image, there is no way (that I know of) to do that graphically.
The way to do it, though is with the two menu items
Image > Image Size and
Image > Canvas Size.
Image Size will change the size of the image, and you have to put it a new dimension either in pixels, inches, percent, or a few other units.
Canvas Size will change the size of the canvas, without changing the image it self. So your art won't change, but you will have more room to draw.
Mike Cooper is correct but just wanted to make one point explicit. The only thing that was missing was after you select your image, you must click (or double click) on the image or it will just change the selection without actualy affecting the underlying image. Once you click it seems to grab the image.