No, that's not photoshopped - it's a real photo of bodybuilder Greg Valentino, who has a 27-inch arm in his peak. He was featured in the recent The Learning Channel documentary on steroids and bodybuilding.
From a very honest 2002 interview with T-Nation on using steroids, its side effects, and going to jail for dealing steroids.
GV: My arms are so big and my shoulders were so broad, they were filming me when I came out of the police station. They do these spoofs about the local news on the Daily Show and they showed me and said, "What do you think this guy was arrested for? Hint: It wasn't estrogen!" Then they showed me on tape and said, "Local police found that this guy was doing steroids. No shit! What, did you think he was storing nuts for the winter in those arms?"
T: Do you think you motivate people?
GV: No, I think I disgust people. I get rotten e-mail from all over the world from people that tell me I suck, I look like shit, I ruined my physique… Then again I do get people who are awed by it, the fact that I'm a freak. Anyway, I know I disgust people. I know I'm the laughing stock of bodybuilding. I know that and that's okay with me.
A tale on how steroids can really screw you up bad. Real bad. A very interesting read: Chris Shugart interviews Greg Valentino