A near as I can remember … PSE 3.0 added some nice tools for the camera hobbyist.
They added a Shadow / Highlight tool that can simply correct over / under exposure problems.
Also - a new, one click, healing brush tool that simplifies making repairs for new pictures or restoring old photos – and a better way to straighten crooked pics.
As near as I can find so far … PSE 4.0 has added a precise method of straightening crooked pics – and a couple of new ( magic ?) selection brush tools that I’ve yet to figure out.
It seems they have added a lot of browsing / organizing features with each upgrade … but I could care less about these tools.
Here’s what’s new in PSE 4.0
Editing and selection
Magic Selection Brush tool Easily and accurately select portions of your photos using this new tool in either Standard Edit and Quick Fix. Simply scribble or place dots on the object you want to select—no need to precisely outline the object—and Adobe® Photoshop® Elements selects the object for you. You can add to or subtract from the selection by using additional tools in the options bar.
Magic Extractor Easily select an object in a photo and extract it from its background. Just scribble or place dots on the object you want to extract; then scribble or place dots on the background, and Photoshop Elements separates the object from its background. This tool is perfect for creating composites or scrapbook images.
Skin tone adjustment Click an area of skin and watch the tonal balance of all colors in the photo improve. If you want, you can also manually adjust the color by using color sliders.
Red eye removal Automatically remove red eye during import, or select one or more files and easily remove red eye in either the Organizer or the Editor.
Defringe Automatically remove the colored specs or halo around the edges of a selection.
Straighten tool Straighten and crop crooked photos by drawing a horizontal or vertical line in the image. Photoshop Elements aligns the photo to that line.
WYSIWYG font menu What you see is what you get—see what each font looks like from within the font menu.
Slide shows on TV If you have Windows® XP Media Center 2005 installed, you can view your Photoshop Elements slide shows on your TV and navigate using your TV remote control.
Face tagging Select a group of photos and let Photoshop Elements isolate and display all the faces so that you can quickly tag them. The Find Faces dialog box displays thumbnails of each face until you tag it.
Search by metadata Search for a variety of metadata criteria, such as file name, file type, shutter speed, camera model, date, and tags. You can search on multiple criteria at once.
PDF support Manage and tag PDF files in the Organizer. PDF files remain intact as one file that you can tag. Open the PDF in the Editor to extract individual pages.
Hope this helps. | 
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Digital Photography & Imaging 
