Photoshop (or any number of other editing packages) is an essential tool for all photographers. There are many film purists who believe it's cheating, but it's really just a different development process. In the olden days you had your film and paper and dunked it in a series of chemicals. It's a skilled process and takes time and practice to get it right. You could also add variation to the chemicals, time and light modifiers to give special effects.
Today, with digital, it's exactly the same. You just do it on a computer! But you can take it further than you could with film. Exposure and white balance adjustments are easy and done all the time to correct a poor original, or just to enhance an already good picture. There is an argument that says it makes photographers lazy. "It's OK. I'll fix it in Photoshop!" Well, yes. But if you take a lot of photos that need fixing you quickly learn to spend 5 minutes getting it right in-camera to avoid hours of staring at a computer screen... And don't forget, every edit you do in Photoshop degrades the original slightly.
I use Photoshop (or more often Lightroom) on all of my pictures. I'll improve the crop and boost the contrast and colour vibrancy. Occasionally I may need to get rid of a bit of red eye or brighten up a flash photo indoors. For studio photos I'll generally add a bit of punch and remove the background or clean up a dirty floor. I can also remove spots if you want me to.
Which brings me to my point. How much is too much? There are some excellent examples here of celebrity photos that have had 'work' done. But where is the line? My personal view is that I will get rid of anything that isn't permanent or that the camera has exaggerated. By this I mean I will remove spots, bruises, rashes, cuts and scrapes. I'll also remove baby dribble where I can. I can clean up fluff from clothes and even swap faces from one picture to another so everyone is smiling at once. I'll also remove ugly fire exit signs from the background in wedding photos. And I can reduce wrinkles and lines that look worse under the studio light.
What I won't do is give you longer legs or bigger boobs. I won't take 2 stone off you either! There's plenty of discussion about the damaging effects of Photoshopped celebrities to young girls (and boys) which I won't go into. But to me the issue is more fundamental. A photo is a memory captured forever. If the photo doesn't reflect the way you actually looked at that time, it's not really a memory, it's a fantasy. There is a place for fantasy, but that's not really my business. My job is to make you look your best. But importantly you are still you!