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it's perfectly fine for photoshop the i5.
I have the newest base model i5 2.5ghz I upgraded to 16gb (bought the ram myself from amazon). I have zero problem with photoshop handling big files. I also bought a Seagate 1TB external usb 3.0 drive for under $129 the speed is insane no lag at all
I know some people suggest just getting a PC but honestly its good to have both PC and Mac. The mac mini is a great low cost yet powerful Mac. Especially if you ever want to dabble in the iOS app market you'll need a Mac.
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