Well, the correct (is there such a thing?) way is to use a 'tilt-shift' lens on an SLR camera. This has a very narrow depth of field so once you have your subject in focus, pretty much everything else will be blurred - looks like using a macro setting on, say, a model railway...
What I did was took that picture with my digital cam and opened the photo in Paintshop Pro then manually blurred everything except the tug and some of the water around it using the retouch tool (pointing finger) by opening the control panel (icon that looks like a hi-fi amplifier) and select soften, in tool controls, and adjusting the 'brush tip' controls to Shape-Round, Opacity-about 60% (60% close to the tug, 100% further out), Density-100%, Step-50%, Hardness-100% and Brush Size - about 7 pixels for up to the edge of the tug and as big as the computers memory can handle to fill the rest of the background (in my case 85 pixels, any more and the screen freezes)
There's stuff here about how to do it in Photoshop - and a spectacular example of a busy street! -
http://www.tiltshiftphotography.net/