I would skip out Photoshop Elements, when I've used it on other computers it didn't have half the functionality of the GIMP let alone Photoshop 6 and really without proper layer masking it would be fairly useless for screenshot editing.
I've tried PSP but found the layer system awkward compared to Photoshop. For what your wanting to do you don't need CS2. I have Photoshop 6 on my PC and CS2 on my Mac, as they're on different systems I can't give a speed comparison. I find the CS2 more productive but that's mainly because of the Mac GUI which is far better suited to that kind of thing than windows IMO, same with the GIMP on Mac vs. Windows. I don't use any of the extra features added in CS or CS2 and one or two occasionally that were added in 7 AFAIK.