Photoshop online - eh. Not so much.

I use Photoshop all the time, actually own a legal copy of Adobe Creative Suite. It's one of only three pieces of pay software I use regularly. (XP, Office being the others.) It's a great program, and has enough of a market that "Photoshop" has become the generic term for any computer modified photo, from simple adjustments and fixes to creative and artistic modifications.

When I saw that Adobe had released an online version of Photoshop, I rushed to test it and have spent quite a bit of time playing with it this morning. I can't say I'm impressed. It lacks the serious tools that have made Photoshop the standard for professionals, and for casual users, the interface is not nearly as nice as some of the other online editors. It also lacks any really interesting or fun tools. Comparing it to Picnik or others, I can see no reason to recommend it over those.
(See my post about online editors here)

All that said, it will probably do well. When people go online for a photo editor, many will Google "Photoshop" rather than "online photo editor" and will perhaps never discover what I consider to be a better product.