how do you go about creating this effect?

Considering the people in the video, i would say it is majorly professional, and i wouldnt have any idea what program it was, but i doubt its widely available or cheap.
 
Looks to me like it would be done in After Effects or something similar - However it looks very complicated. The only way I could do effects like that is by merging stills in photoshop - but at 30fps, that's a whole lot of single images to create and edit!
 
I like to call that 'After Effects Whoring' :p There was a guy in my class at Uni that could do similar stuff to that. I dont think it is that hard, just takes a lot of time to learn and perfect -- and do.

EDIT: If you want to see some really cool-looking stuff, watch a film called Riding Giants. The animation they have on there (using simply old photographs of the durfers) is amazing. You can see a tiny part of it when the word 'EXHILERATING' comes up a little way through the trailer here: http://www.youtube.com/watch?v=FuE7AuYHs6Q (I'll try to find a better clip, i know there's some about it in the making of). Essentially making a photograph 3D. Really cool.
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