|I use both Photoshop (currently CS) and Elements (2) as my only image editing programs, and I use them both professionally and daily on Mac and PC.
Elements can serve to do anything you really need barring volume CMYK, heavy web graphics, and 16 bit support (it has Curves, CMYK, vector editing and a lot of other things people tout it not to). It can run actions you create in photoshop, so can serve as a production license for processing images. It is also great for people learning because there are fewer functions to confuse you with. I've created some add-ins that give you Curves, Color Balance, Channel Mixer, channels, mock LAB mode, vector editing, layer alignment, layer masks, and a ton of other stuff...some tools come with my book: The Hidden Power of Photoshop Elements 2, and others come from a free download on my website: //hiddenelements.com
Photoshop is certainly the more powerful of the two, but may actually be a waste of money if you are not doing some serious production work. New features in CS make it worth the upgrade for professionals (16 bit support, Layer Comps/saved histories, RAW support), more-so than I think Photoshop 6 and 7 did. I would definitely use Elements as a second license instead of buying two (or more). You can write actions in PS and play them in Elements. I show how to use some of the finer features of using CS in my new book The Hidden Power of Photoshop CS, which will be out in December.
I have used PSP, and think it is pretty good, but a major drawback for that program for me is no Mac support. I work in a dual platform environment. If that doesn't matter to you PSP is a fine choice.
My suggestion, more than which product you get, is to 1) not be ashamed of the product you use and aspire to anything because it is "the best", and 2) learn to use the program. Many people think that just by paying more you will get more...what you get is different ways to do things, and more processing power -- and more stuff to learn. If you are already short on time and want to do things faster, you'll have to have some time to devote to learning a more powerful program: your speed and images will not improve immediately. I find that as long as I have layers and accurate layer modes, I can do just about anything (including channel separations). Get the most out of the product you have and KNOW you need something more before you upgrade. An honest evaluation can save you money. With money I have saved using Elements, I have been able to upgrade equipment, which has provided a lot more power than bumping up to more PS licenses.
Hope that helps.