I have Version 7. CS and CS2 all working on different hard drives, Brent is right, 7 can do near enough all you need and is slightly quicker, I use a combination of all 3 it depends what my idea is, CS2 is awesome if you are uber skilled though, but 7 should be fine for a standard talented user.
I have used Photoshop since version 3 and in my opinion anything below 7 is a little basic although 6 isnt too bad (but Adobe update to 7 faster than a whippit with a bum full of dynamite, I wonder why).
Also Photoshop Elements 1,2 and 3 are great for most simple tasks and you can get some great results too.
Basically though its up to you, I would plump for 7 overall.