[fletch]

Photoshop Elements can do 90-95% of what the average photographer could ever need. You may have to utilise the odd work around or one or two free plug ins to replicate something Photoshop can do but it can be done, unless you really need full Photoshop profesionally or for a specific aspect of your hobby I wouldn't stump up the $1000 it costs. Spend it on a lens instead!

Where PS Elements is a lot weaker that full PS is RAW development. Elements has a cut down version of Adobe Camera Raw (ACR) which is better than 95% of editors out there, but nowhere near a good as the full version of ACR. This is where lightroom comes in.

Lightroom is the an excelent photography cataloging program that just happens to have the awesome ACR development program built in. If you shoot RAW it really is the best thing since sliced bread, if not it is probably overkill.

I personally do 90% of my editing in Lightroom and then use PSE6 if I need to do some pixel level edits.

I would recomend starting with PSE and if you shoot RAW consider Lightroom (although even that is expensive). Only get full Photoshop (currently verision CS4) if you know exactly why you need it and have reached the limit of PSE.