Elizabeth-
Well, since you asked... 🙂
<evangelism class="adobe">
The first thing you notice when you launch Photoshop 7 is a visual change. The palette buttons have been modernized to look sleeker with icon shading and colorful hover effects. I wasn't sure how I felt about it at first (I thought that Adobe was probably responding to market pressure from Macromedia whose products have much glitzier UI's), but after a few hours of use I came to appreciate the changes. Adobe hasn't abandoned the elegant minimalism of their earlier interfaces; they've just updated the theme. The toolbar is actually more minimal than before, since they've eliminated the grid effect of the button outlines.
There are some nice new features that I actually use, too. The new file browser is more than a convenient way to preview thumbnails -- it's a powerful tool for managing your files. You can quickly rotate images, rank them by quality, and do batch renames (with very customizable schemes and incrementing serial numbers). The new healing brush is AMAZING -- it's become my primary photo retouching tool.
There are a few other improvements that I haven't completely explored, like the new painting engine, custom brushes, Auto Color command, better liquify functions, and scripting support. And of course a bunch of improvements that I don't have much use for, like the new spell checker. Overall though, a pretty substantial update.
</evangelism>
That being said, Photoshop 6 is not by any means outdated by this release, and whether to upgrade now or wait for the next version is an open question. It was easy for me to decide since my company was willing to foot the bill... 🆒 If I had to fork over the money myself though...tough call.
jeremuck-
Apps like Paint Shop Pro and Fireworks have their strengths, and if the tasks you plan to tackle fall within their scope of features they can be a good fit (and save you some $). It's just a question of what you plan to do with the app. Some people don't want or need to be all-powerful, so they don't need Photoshop.