Its very good. You will need to work it however. check out WWW.marshallartz.org to see what I have done with it.

It's a pretty cool program with some heavy duty features that most users will never touch.
There are cheaper alternatives that will do what's needed.

I would not recommend the full version of Photoshop to anyone that isn't at the "semi professional" level.  If what you want is the ability to eliminate red eye, crop photos, and make minor color cast changes, there are much simpler options out there.  The real power of Photoshop is in composited layer management, channel operations (often called chops), and robust tools like cloning...  And these are all tools likely to be used only by professional illustrators and photo retouchers.  I think Photoshop still has a limited "LE" edition, I think called "Photoshop Elements", but others also have lighter-weight image processing software available.

Re:Photoshop 7

au contraire, ps is prolly one of the most well-designed photo editing tools out there. it does, however, require some upfront time to learn how to use it.  whether or not you need it depends on what you intend to do:

for serious post production work, identity design, website design, and professional or advanced level photography work, take the time to learn it.  also, PS is really a requirement for any professional work.  it will take a week just to get used to it.

if your interest is more simple graphics, light web work, and fun, you can investigate Ulead PhotoImpact or Paint Shop Pro.  These are fairly easy to learn quickly and in many ways match photoshop's capabilities and go beyond (Ulead in particular - boat loads of features, simpler layering, the path tool is excellent).  

If your intention is photo touch up, focus on learning about Masking, Unsharp, Contrast Adjustment, web-optimization.

If your focus is on web stuff, you might want try Ulead Photo Impact - Look for Stephanie's tutorials.  You can get going in about a day.  Good luck either way.