I am referring to the software, not the users. I would tend to agree, full-blown Photoshop is well beyond the requirements of most casual users and most can make do with the alternatives. On the other hand many serious photographers end up using Photoshop at some point, because of the limitations of both Elements and Lightroom.
I have very limited experience with Elements (and certainly not with recent versions), so can't make any meaningful comments. I had it before I acquired Photoshop CS and found it rather limited, which is why I spent the money on full-blown Photoshop, not to mention the many painful hours learning to use it. I find that Lightroom has significant limitations as well (I've been using it since the first beta version came out, and back then it was more of a catalogue management tool). It has become more talented with each subsequent release as its editing capabilities have been upgraded. From a editing workflow standpoint, there is little to chose between it and ACR; both have a common engine. I find that lack of layer support is the main downside of Lightroom.
When it comes to a RAW conversion tool, I find I use three different ones. I find that Nikon ViewNX2 / Nikon Capture NX2 give me the most accurate colour conversions, while DxO has a much better engine for lens correction. ACR (and Lightroom) are the most convenient because of their tight integration with the rest of the Adobe Creative Suite software.
That being said, Photoshop has numerous features that I personally would find it hard to live without. I am largely a non-destructive editor, so adjustment layers, clipping masks and layer masks are part of my everyday workflow. I also depend quite heavily on blending modes in my work. The content aware tools in both CS5 and CS6 are absolutely fantastic and I can do things in minutes, rather than hours. I don’t know how I would survive without the pen tool either. I use the burn and dodge tools extensively, as well as the healing brush and patch tool. My usual workflow is a Bridge to Photoshop flow. I do use a Wacom tablet when I edit..