I'm not an Elements user, I have used their trial version, but I can understand the cost differential between Elements and Photoshop. Photoshop is a program for all disciplines. More and more photographers in my classes ask me if Elements would work for them. The first thing I ask is, "Are you using Lightroom?". I then go on to suggest that the combination of Lightroom and Elements would give them everything they need to produce outstanding images. Later, when they become more proficient, they can upgrade if they feel it necessary.
Matt Kloskowski , one of the NAPP Photoshop guys, has written a good review of Elements that I suggest you read. You can find it here. You may have to scroll down a bit to find it.