Not much to add to this, I think Massacre hit pretty much all the points. What I will add is:

If you aren't as familiar with photo work on the computer, or aren't planning on doing a lot of it, JASCs Paint Shop Pro will probably be fine. It has 80% of Photoshop's abilites, at 20% of the price, comes with a nice big manual and historically it is easier to use (haven't tried the newest version yet). I use PSP for my image work, and I'm very happy with it. My dad and I have been digitizing old slides and photos and using PSP to do touch ups; I've worked with Photoshop professionally, and I just don't see the advantage to home users who aren't digital or commercial artists as well.

I'm also not sure if it's worth storing the AVIs. It is a pretty raw, and bulky, format. For the resoluation of a VHS/Betamax/etc, converting a standard DVD to the next generation media if and when it is needed will give you the same results. Right now the Blueray vs HD-DVD fight is where VHS vs Beta was in the late '70s. And either one or both of them could end up being the next laserdisc; anyone else remember those things?