cs 3 may bring changes, but as far as i know ps doesn't do particles.  at all.  with dogwaffle, you can paint grass, foliage, water flowing, sparkles.... and animate it.  i also don't think ps does any animation to speak of.  image ready does animated gifs, but i don't think it has real tools, like the particle physics built into dogwaffle.  nor does it naturally come with different media, or a palette where you can mix colors.  basically, i think they're entirely different programs with entirely different strengths and weaknesses.

the free version of dogwaffle is several versions behind the full version: 1.2 to 4. i don't think it even has layers.

personally, i've not dared to take on dogwaffle, because this is just a hobby and i already know and use photoshop for work.  but it's always been appealing.