Text Question

Hey everyone. I hope your holidays were awesome! I come with a quick question because this baffles me and I haven't asked anything in a while. I wanted to know how you do this effect with the text the way its all wavy. It's the new trend I guess and I would love to know how this is done.While I'm at does anyone know what font this is?

I use Photoshop 7 and Imageready.

Both of these icons were made by iconfection, and please don't take them.

Thanks for your help in advance.

Lily*