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PSElements will do everything you need. And at less than $100 it's the best deal around. After rebates, I paid $69 for mine. I had a chance to get PS7 very cheap and that was the reason I switched. But after using it for awile, I would still be perfectly happy with Elements. The extra features are nice, and maybe down the road will become necessity, but Elements was a bit easier to use and did an excellent job. The $600-700 price for Photoshop is tough to justify unless you are a power user. A student discount or something like that will cut that in half but that's still a stiff chunk of change.
Yeah, I agree with Dee, PS Elements will take care of almost everything... I've got PS7, like it but downloaded a copy of Elements and it's the exact same thing for the things, limited as they are, I do...
If you need PS7 or CS (newest versions) then go for it, but Elements will be your best bet.. especailly for under $100 and you'll be trained if you ever move to PS7/cs
the only other program I've used is Paint Shop Pro, which seemed to work too, but would recommend PS Elements in case you do need to upgrade to PS regualar..
Hope that helps..