[photoshop-beginners] resize photograph

Hi, I am trying to learn how to re size a photo in CS2 PS. The problem is that when I re size to fit the new canvas size I want, the height of the photo is not enough and I end up with a section above the photo that is the back ground color. I can't keep extending the length as I lose parts of the photo I want to keep. In PS7 I could just clone in some sky to fill this section up. Appears CS2 sees this as a fill layer and will not let me clone into it.
How do I make this area so I can clone some sky in ?

Thanks Steve

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