Hi,
I find that both programs compliment each other, and if you really want to find out which one is better, I suggest you download both trial versions, and test them yourself, as it is primarily a matter of personal preference..!
I find that PSP is great for whipping up quick graphics, and is a lot easier to use and learn than photoshop... however, photoshop, as petitpal said! is great for that proffessional look, and more fancy things....
anyway, I'd suggest that if budget is a constraint, get psp7, it's great, but if you want to do print quality stuff... use photoshop....
I find that photoshop has a lot more plugins available too... but if you aren't used to graphic programs, and this is your first sort of go on them, use psp, as it has a really easy to learn gui!
Also, I'd advise strongly to asking the same question in a PS forum

as most people here would be bias to psp
Hope this helps

Seeya!
Kitten ^_-