Updated March 2012.
Adding mist to a landscape photograph is surprisingly quick if you use Photoshop's Gradient tool.
Step 1: Open Your Image And Crop
Open a suitable photo. I chose one at Derwent Valley in Derbyshire. It has a reflection in the reservoir and is a typical scene where some mist won't look out of place. Avoid using shots with foregound detail, such as trees or rocks, at first as these will need masking to prevent the mist from looking incorrectly placed.
I first cropped the small amount of sky and its reflection in the water, making the image a more oblong shape which suits a landscape.
Step 2: Create A New Layer
Create a new layer: Layer>New>Layer (ctrl + n)
Step 3: Select A Gradient
Select the gradient tool and choose the foreground to transparent gradient and the linear reflected option.
Step 4: Change The Foreground Colour
Change the foreground colour to slightly off white. Double click the foreground colour square and click on a point far left and near the top in the lightest area of the colour picker. An RGB value of Red 240, Green 240 and Blue 240 is fine.
Step 5: Add The Gradient
With the Gradient tool selected click on the photo where you want the centre of the mist to be (the water's edge). Hold down on the mouse and drag either up or down to where you want the mist to fade out (mid way up the tree stumps). Let go and the band of mist will appear.
Step 6: Reduce Opacity
You can now reduce the opacity of the layer for a weaker affect.
Step 7: (Optional) Use the transform tool
Try using the Transform tool (Edit>Transform>Scale) to stretch the mist band to cover more of the scene. Click the top centre box and drag upwards or the bottom centre one and drag down. Now use the Hand tool to make any final adjust of position, making sure the centre of the fog is at a natural level.
That's it. Told you it was quick and easy! Here's the final image: