FWIW,I have a Lensbaby but often help the effect along in Photoshop.
Here is what I do (for 6-8mp images). First take the image you want to try. Then duplicate the background as a new layer (CTRL+J) then got to filters>> blur>>box blur and select 20 then click OK. You now have a boxy looking blur.
Then make a layer mask on the new layer and click on the layer mask. Then select the Gradient Tool, make sure your foreground color is black and your background color is white. Select the "Radial Gradient" from the top tool bar. It is the one with the white circle with black around it. Then click in the center where you want your sweet spot to be and then drag it off the picture. You will then have a clear sweet apot with box blur getting more blurry along the edges. If you don't like the first result just click and drag again. The gradient tool will delete the first gradient and make a new one. You can do this as much as you like just remember where on the screen you stopped your dragging. You can also touch up your sweet spot a bit by using a soft black brush.
When you have the sweet spot where you want it flatten your layers and then duplicate the new background layer. On the new layer select filter>>blur>>gausian blur and select 50 then click OK. Then make a layer mask and repeat the gradient tool you did in the first step and if you used a soft black brush do that again also. (note in the first step you could also ALT click on the layer mask and then copy it to the clipboard and then paste it in this step, but I often like to play a bit)
I then adjust the Opacity down to around 30-60% depending on how the image looks. The trick here is that you are blurring the box shaped blur, this double blurring gives you a very dreamy look with a bright clear sweet spot.
While this works great with LB images it also worls great with Non LB Images like this one.
The Before
The After
Note this picture was not taken with a LB but rather a normal lens.