I think Photoshop is a great tool for designing web layouts. You have complete freedom to create without having to worry about browser issues, etc. Create different layer sets for different options, and when you've picked a final design, many of the graphic elements are ready to use.
However, I would strongly discourage people from just using the 'Save for Web' feature, and leave it at that. Photoshop is only a starting point, and you will have to alter the resulting code considerably. On a simple level, you will need to replace many graphic elements with html, so the whole page isn't one big graphic. For example, photoshop text should be changed to html text in general, and large areas of solid color could be converted to a table cell with a colored background, or a positioned css element. Another fix would be making areas of the layout expandable to accomodate more content, or enlarged browser fonts.
With experience, you'll know what kind of restraint you should use when creating the original designs. It's certainly a great way of speeding up the approval process, and getting a solid idea in your own mind about how the site will look.