I've made an updated version of the Blend for the new Cycles render engine. Works in 2.68. Cycles might run slow if you're using a dinosaur computer. In that case, decrease the number of samples in the Sampling pane.
Go to the Nodes editor, and add a transparent shader (Transparent BSDF) and use the Mix shader to mix it with the already-present Diffuse BSDF. Link the image texture's Alpha to Mix's Factor so that it looks like this:Now you've got your Steve head!