For most of my students, I recommend that they purchase Photoshop Elements.
Photoshop Elements (PSE) is cheaper than Photoshop (PS) (about $80 v. $600).
Do consider the cost of upgrades, also.
The periodic upgrade for PS costs more than that of PSE.
For example, part of the learning curve is finding where a command or tool is located.
The drop-down menus are much easier to navigate with PSE.
PSE does what most photographers need to do.
There are workarounds for features that you may want to use that are absent from PSE.
Curves allow fine control of exposure, contrast, and color.
• PSE 5.0 and 6.0 have curves, although the feature isn't as sophisticated as the version on PS.
• You can use curves when you process RAW files, if your RAW converter has the feature.
You may already have a RAW converter from your camera manufacturer, such as Nikon Capture or Canon's Digital Photo Professional.
You can also purchase RAW converters.
• Qimage, a $50 program, has a curves filter.
Soft proofing allows you to see how your photograph will look as a print.
Soft proofing is available in Qimage, a $50 program (Professional Edition or Studio Edition).
PSE is sometimes packaged with a $100 coupon for PS.
Registered PSE users may also receive offers from Adobe for discounted upgrades to PS.
What you learn with PSE can be used should you switch to Photoshop.
PopPhoto
You should start with Elements 5.0.
It's reasonably priced, and if you're a newbie it won't overwhelm you.
Sue Chastain - about.com
If you are a home user or hobbyist, save your money and go with Photoshop Elements. It has all the features of Photoshop that you are likely to ever need.
Joe Farace - Shutterbug
There are several Photoshop functions not included in Elements but I'm not sure that the true target audience will notice.
Photoshop Elements does not offer channel operations, Bézier drawing, vector clipping paths, or support for CMYK images.
Do you care? When is the last time you clipped a vector’s path? I never have.