Yes .. resizing the canvas does NOT resize the image. It just leaves more 'white' space around the image.

Now, if you want to resize the image, and you're using CS2, consider creating a 'smart object' of your image. Once you do that, scaling no matter how many times - either up or down - will not deteriorate the image.

Go here Good-Tutorials.com for a wealth of information. Search on 'smart objects' and you can see for yourself.

HTH,
Tom