The i7 is a great chip and more than capable of handling bulk photoshopping. As mentioned, photoshop chews ram and spits it out so a 64 bit OS is a must. I run Vista Home Premium 64 bit with 8gb of 1066 MHz ram and itruns well. I am using a much older CPU (e6600 core 2 duo) soCPU isobviouslynot the limiting factor.
Invest in a decent graphics card such as the Nvidia 275/285/295. The 260 GTX, although an excellent card, was well and truly superceded by the 275 GTX and the price difference is small for the benefit you get.
I would also suggest Windows 7. I trialled a beta version and it was much more stable than Vista... and by "much" I mean HEAPS.
Happy spending.