A friend asked me the other day what I thought about Photoshop as compared to Photoshop Elements. I’ve been using Photoshop myself since its very early days (think before it had Layers), and have thus had no need for Elements, so I’m not really familiar with it at all. I decided to find out what I could.
If you do a search (I used the term “difference between Photoshop and Photoshop Elements”), you’ll find many pages devoted to this subject, a few of which I’ll talk about here. I started with Adobe’s website, since they make both packages; their FAQ page has only general information, but it’s a place to start.
I got more details from some other sites, like Improve Photography, which answers the question from a photographer’s point of view; this is really useful if your intent is to produce professional-grade photographic work. (And the rest of this site appears to have a lot of good information too, including a Beginner page and Recommended Gear.)
My favorite, though, came from Simple Photoshop. It has a lot of great information presented in a table format, which makes it really easy to compare features between the 2 applications.
Again, since my own experience has been with Photoshop only (since long before Elements even existed), I’m not the best person to answer this question. In general, I’d say that if you’re aiming for professional photo editing, make the full Photoshop investment; for any other purpose, Elements will most likely have more than enough features to keep you very busy. (And by the way, there are other photo-editing applications out there, some of them free! Have some fun shopping around.)
Outside of that, I’ll leave you with this advice, given to me by my dad (who was a computer engineer at Boeing) when I was thinking of buying my very first computer (c. 1990). He said first, figure out what you want to use the computer for, then look for the software that will do what you want, and then find the computer that will run that software. Relative to the Photoshop vs. PS Elements question, I’ll paraphrase it like this: Figure out what you want to use photo-editing software for, then look for the software that will do what you want it to.