Effects -> Tools -> Liquify...
This plugin is similar to Photoshop's Liquify or GIMP's IWarp, but better because it's in Paint.NET.
Compatible with Photoshop's mesh files.
To change the background color or use a picture, right-click on the image in Liquify.
To change the frame color, right-click on the frame.
- Bicubic interpolation (i.e. better quality)!
- And more!