If true, what did it look like and did it cause any psychological issues?
Cranial modification was practiced over much of the Eurasian steppe and the Caucasus, not just by the Huns, but also by Scythians, Sarmatians, Alans, and others. The frequency of such modification increased in Europe after the arrival of the Huns in Europe, and this is likely to be due to cultural influence of the Huns. It is likely that cranial modification in Europe was not restricted to the Huns, but was also performed by other groups culturally influenced by the Huns.
A key part of the evidence that this was actually done is the skulls themselves. Some examples of Hunnic or Hunnic-influenced skulls:
https://i.imgur.com/4JXR41m.jpg (Montandon, 2017)
A reconstruction of what a Hun with a modified skull might have looked like in life:
We have no evidence that this caused any psychological issues or any neurological disease (Molnár, 2014). It is possible that it might have caused neurological problems in some individuals, but probably only a small number of individuals.
The practice appears to have continued in Europe into late Medieval times:
References and further reading (and further pictures):
Peter Mayall, Varsha Pilbrow and Liana Bitadze, "Migrating Huns and modified heads: Eigenshape analysis comparing intentionally modified crania from Hungary and Georgia in the Migration Period of Europe", PLoS One 12(2), e0171064, 2017. https://dx.doi.org/10.1371%2Fjournal.pone.0171064
Mónika Molnár, István J ános, László Szűcs, and László Szathmáry, "Artificially deformed crania from the Hun-Germanic Period (5th–6th century ad) in northeastern Hungary: historical and morphological analysis", Neurosurgical Focus 36(4), E1, 2014
Denys Montandon, "Head Shape Configuration Over The Centuries", The Journal of Craniofacial Surgery 28(8),1890-1900, 2017