Well, I usually use Photoshop on people pictures. Skin smoothing, getting rid of acne, that sort of thing. No matter how good a camera you have, or how good the initial shot was, people aren't going to look as good until after you've given them a little of your time.
I also use it for making all kinds of crazy composite pictures. I.e. putting my friend's head on Hugh Hefner, or making someone ride a kangaroo
