It's my understanding the main difference is that Elements does not have
layers (I'm not certain of this).

Last time I looked you could download a free trial of Elements and find
out for yourself.
Last time I tried it on my PC it ran once and then hung, then refused
to run again.
Needless to say I didn't go on to buy it.

Elements 3.0 handles Minolta RAW very well and runs quite well on my
dual-core Athlon (2.2 GHz), but was slow-to-start on my 2.4 GHz Celeron.

It provides many useful filters (I mainly use unsharp mask and little
else, your needs may be different) and more filters can be added ($)
from 3rd party sources.  Many curves, histos, layers, etc. etc. etc.

16 bit mode is restrained, so I edit as much as I can in 16 bit (after
RAW import) before converting to 8 bit for crop and unsharp-mask final
output.  8 bit/color is more dynamic range than most (all?) printers and
certainly all displays.

Only nit is "info" on color is RGB which makes skin tone adjustment hard
(would be much easier in CYM using yellow/magenta as guide... this is
available in CS, not in the Elements products).

I can only assume that Elements 4 / 5 are better than Elements 3.  I
will buy CS2 when it innevitably goes on sale before the next major
revision.

£500 is very expensive for CS2.  You can get it in the US for US$650
which is quite a bit less. (£=US$1.87)

Cheers,
Alan

Photoshop Elements is an excellent value that will probably do
everything you want to do. In many ways it is actually easier to use
than Photoshop. Adobe has a habit of introducing new features in
Elements before putting them in Photoshop, believe it or not. The
red-eye tool was an example of this. While Elements has not got the
power or capability of Photoshop, it does have many more useful tools
and templates. Elements is for people who don't think they need to
re-invent the wheel every time they edit a picture. Photoshop is for
those who like to tinker a lot.

Check this out:  http://www.photofiltre.com/