I have not yet had time to get into Elements 3, (on my list of things to do) but I did a comparison for my Digital Workflow course of Photoshop and Elements 2. Keep in mind that some of this may have changed with version 3.
Adobe Photoshop Elements 2 or Adobe Photoshop
* Elements 2 offers more "short-cut" solutions to color correction with automatic features. Not necessarily that useful for underwater shots.
* Elements 2 has more automatic special effects and filters in the forefront. These effects can also be achieved in Photoshop, but are given less priority.
* Both have excellent built-in Help Tools & Tips. Elements 2 offers a bit more hand-holding than Photoshop. For example, The Recipes palette (How To) provides links to tips on how to accomplish specific tasks that the novice might not already be familiar with. The Hints palette shows you how to use the tools that are available. You can display Tips with the dialog box of each tool you use.
* Photoshop has more color spaces available for working with images for print (CMYK) and other formats.
* Elements 2 does not have the Curves command available in all versions of Photoshop
* Elements 2 does not have the Selective Color command available in Photoshop
* Elements 2 does not have the Color Balance command available in Photoshop
* Elements 2 does not have the Healing Brush and History Brush available in Photoshop
* Elements 2 does not have the Fade Filter
* Elements 2 does not have a Channels Palette available in Photoshop
* Elements 2 does not have Quick Mask available in Photoshop, but it does allow you to paint a selection and save that selection.
* Photoshop adds the option to save a particular color correction made in commands like Levels and Hue/Saturation so you can apply them later to different images.
* Photoshop allows you to adjust the options in the Levels command to modify the affects of the Auto option.
* Photoshop has more options when using Layers and Layer Masks.
Of course this is only a partial list of some of the more obvious differences in those tools and commands we used in the course. I've got the Elements 3 program now and will be doing an update shortly.
Elements has many of the features found in Photoshop and is a great program in itself. If you don't have any experience with an image editing program, you may be overwhelmed by all the options available in the full version of Photoshop. Might not be a bad idea to start with Elements 3 and eventually upgrade to the full version of Photoshop. You'll have much of your learning curve out of the way.
Hope this helps!
Bonnie