i have recently "switched" to a g4 powerbook (887Mhz, 15"). i use it now as my main computer, email gets downloaded to the powerbook, and all the software i need for business are also purchased in their mac-versions.
to be honest, it's a bit tough at times. first of all, the notebook can never compete with the ease of use of a desktop, as far as screen size etc. are concerned.
i always plug in an external mouse (from microsoft

) so i can use both buttons, but when i'm just using the trackpad, ctrl-clicking is okay. since trackpad and huge button are awkward to use anyways, the added ctrl-click doesn't really make things worse.
i upped the standard 256Mb of the powerbook to 1gb, since i do a lot of graphics and need programs running simultaneously.
a macintosh is pretty fast. it's faster than a pc, sometimes, and sometimes you laugh at it for failing to display simple flash animations fluently. but since they're so different, there#s not really a basis to compare with.
you definately need ram. a mac that's dead slow with 128Mb will turn into a rocket when you bump up the ram. they're cheap (upgrade to 1Gb was only about EUR200) too.
regarding the photoshop issue: i have worked with photoshop for a long time, most of the time on legal versions running in school, or in the office. at home, when i needed to do something, i relied on a pirated version, i confess. but since i've started my own company, i needed to be legal, but couldn't afford the photoshop license. so i got photoshop elements at a fraction of the price.
i do screen-design, and elements has all i need. i don't need CMYK, no need for funky color-things, all the filters are there.
one thing i miss is the ruler, i use that a lot to straighten out a scan.
get elements, then earn some money and when you feel like you're missing out on something get the elements-to-photoshop upgrade. you'll even save a bit as compared to getting photoshop right away.
another advantage of my mac is that since i'm dealing mostly with graphic people, the chances of them using a mac too are pretty high, which can help eliminate conversion problems etc.
i don't regret getting the 887Mhz version, it's fast enough for everything i do. sometimes, encoding video takes a while, but it takes some time on my dual-athlon workstation at home too so it doesn't matter that much.
i only wish i would have gotten the faster one since it includes bluetooth and a superdrive. i recently learned how easy dvd-authoring actually is, and could definately use it. but since i don't have a superdrive, i'm dependant on my colleague's desktop g4 with dvd-writer.
do you need MS Office? yes you do. most files are being sent in DOC/PPS format, and you can't read those on a mac without an office suite.
(that's still on my to-buy-list)