I often get asked and see asked on forums which is better, Lightroom or Photoshop. The simple answer is, if you ignore cost its Photoshop, Photoshop does everything Lightroom does and more. But that is ignoring cost and also not asking what do you want it to do for you. You have to remember I am writing this as a Photographer, so my view of Photoshop is only from a Photographers perspective and therefore I only use Photoshop as a last resort to make corrections and remove blemishes from my images as I try and get everything right ‘In Camera’, I am not using Photoshop to do any ‘heavy’ editing or manipulation.
If you are on a tight budget the answer is simple too, Lightroom. Lightroom is a fraction of the cost of Photoshop and in my mind offers much better value for money.
I use both products, my first port of call is always Lightroom, when I return from a shoot the first thing I do is import my photos into Lightroom, I use presets that add my copyright data into the metadata, adds keywords and also perform slight adjustments to my images to meet my tastes, these adjustments are only a starting point and I almost always tweek them, but they move the image closer to what I want as a starting point. Once Imported I then do any post production editing (exposure, white balance etc) but as little as possible, also any cropping or vignetting I want to do. At this point in Lightroom there is a spot removal tool that can be used to remove any blemishes that you want to remove and any skin softening can be done and this works fine, but I always do this in Photoshop, its a much more refined product and although the difference between the results in Lightroom and Photoshop are often minimal there are differences and Photoshop always has the edge.
For me Lightroom is a great tool for cataloging my photos, 90% of post production work and adding presets to the images, its also great for exporting to flickr as you can setup a template which includes a watermark and resizing the image. Also any keywords added in Lightroom are exported as tags into Flickr. Then Photoshop is for any editing that is needed above and beyond what I do in Lightroom.
To summarise, as a Professional Photographer you need both products, if you want to do heavy manipulation and editing on your photos you need Photoshop, but for any other photographers Lightroom will probably do exactly what you need and at a fraction of the cost of Photoshop.