The first step is to input the text you want to create using black and white text, and then rasterize the text layer (the menu item in CS3 is Layer->Rasterize->Text).
In the second step, use the polar coordinate filter (Filter->Distort->Polar Coordinates) and select polar coordinates to plane coordinates.
Step 3: Rotate the canvas 90 degrees and apply the Wind filter (Filter->Stylize->Wind) to it twice, once from the left and once from the right. Then rotate the canvas back and apply the wind filter from left to right.
The fourth step is to use the polar coordinate filter, this time selecting plane coordinates to polar coordinates.
Finally, create a new color balance adjustment layer (Layer->New Adjustment Layer->Color Balance) and adjust the color.