Truly Photoshop is a program for the gods!
Alternatives:
Gimp- very similar to Photoshop but free. I myself have not used it much as I have a ton of training with Photoshop and know it really well, but from what I saw it is like Photoshop ~8 or so last time I looked at it, and was perhaps easier to use without going to classes to learn how to.
Educational version (if you qualify) Here the whole version of the latest (CS4! They are evil for coming out with a new version... this thread is evil for making me look... oh if I hadn't had all those vet bills recently I would be so tempted. Who am I kidding? Still tempted!) But the thing with Photoshop is, if you don't know how to use it, then the full version is usually a waste of money.
Adobe Elements For people who aren't Photoshop junkies who are completely addicted and tear up at the opportunity to teach others the wonder that is Adobe (ok, not quite that bad, but I did choke up a bit learning the new CS3 features...) Elements is a great program. It's basically as powerful as Photoshop, for a LOT less money. It annoys people who do crazy things with filters and lighting etc. etc. and when you go to look for your PS tool and it's in this weird (and to be honest, more intuitive) location. The website's got some weird stuff about the Elements- asking for a membership or you need to buy it through the education store? I don't know what's up with that. You might also be able to find an older version for even cheaper at a software wholesale type place or some such. If you qualify for the student discount it's only $69, otherwise it's like $119 (with some sort of membership).
I would recommend going with either Elements or GIMP if you've never used an Adobe product before. I'd only buy the most recent one if you are a PS guru (I'm seriously considering that upgrade...) If you want any version of full PS, I would definitely recommend a class in it if you don't know your way around. It's a daunting (beautiful, sexy, amazing, powerful...) program. Heck, even knowing where the tools are can be frustrating for people who've used it before but upgrade...