I'm using CS3 on a mac and trying to free transform text. I used to be able to free transform the box by the individual corner in the previous versions. I'm trying to do just a simple pinching of text at one end and larger at the other end. Now when I command click a handle it scales proportionately. WHat am I missing?
Actually, to do what it sounds like you want to do there is a text warping tool in PS that'll do just that, among other things.
Select you active text layer. Then, with the text tool selected, go to the text options bar at the top. Over to the right you'll see a button icon that looks like a T with an arched curve under it. Click that and it'll open up the warping tool.
Select any of the styles that you want. The control for distorting it the way you described actually can be applied to any of them, so just pick any to start. BEND, HORIZONTAL DISTORTION, and VERTICAL DISTORTION; those are the controls under each style. The Horizontal distortion slider will do what you want. You can set the bend to 0 if you don't want any other kind of distortion along with it.
A nice thing about this tool is that it is applied to live text that you can continuously change in any way you normally would, and you can change or remove the warping at any time. Great for wavy text, circular, fake perspective, etc., with all the flexibility to edit what it says at any time.
You cannot transform type using free transform because the type is a vector. As David mentioned, you would have to rasterize the type first. Once rasterized, you can use free transform on it but the result will be rough and blurry looking. The best way to do what you want to do is either transform the type into a shape before using the free transform or like Peter said, just use the build in warping tool.
Here's a web page (link below) that should be of interest to you.
You're right, that was a bad choice of words on my part. I meant to say that the OP could not use free transform to do what he wanted to do ("pinching of text at one end and larger at the other"). He would need either the "Perspective" or "Distort" functions and both are grayed out when working with a text layer. Thanks for the correction :-)
I guess it's not because the text is a vector either? I've noticed that those functions are available with vector images other than text. Must just be because it's a font, right?