If PS 7 does everything you want it to, then stick to it. CS2 is more of a resouce hog, and has lots of features that the average user wont use
I would recommend upgrading. All the features are usefull and with a gig of ram its not taht bad. There are some newly upgraded features and filters. Trust me I used 7 and CS for a while and I prefer CS2.
I use CS 2, and I think it's awesome. ^_^ And besides, PS 7 can't use some of the nice brushes CS 2 can, so I've heard.