I would absolutely recommend getting Photoshop Elements. It's got most of the features of Photoshop you'd ever use, and is much cheaper. You can get it bundled with Premiere Elements for $74 on Amazon right now, in fact. In fact, I bet you'll be surprised how powerful Photoshop Elements is; I could follow many detailed Photoshop tutorials in it with no problem at all.
The only problem you might hit with Photoshop Elements is that you can't group/ungroup layers in it by default. If you need to do that much, you might want to get Elements+ (http://simplephotoshop.com/elementsplus/) as well, which is an addon that unlocks some of the hidden features of Photoshop in Photoshop Elements.
No problem at all! You might want to try out a Photoshop Elements trial along with an Elements+ trial and make sure it fits the bill for what you need, but I bet it would.
The only problem you might hit with Photoshop Elements is that you can't group/ungroup layers in it by default. If you need to do that much, you might want to get Elements+ (http://simplephotoshop.com/elementsplus/) as well, which is an addon that unlocks some of the hidden features of Photoshop in Photoshop Elements.