Of course. But I said "the average" user. Of the computers that I see, not one in twenty has Photoshop. (If there is a high-power app, it's likely to be a game.) Sure, some people do video editing or CAD, but not that many (audio recording and editing doesn't require all that much power, a 378M P3-500 is adequate for that, although some transformation operations are opportunities to go get another cup of coffee).
Sometimes, for certain values of "good". Though I'm not convinced that the horsepower:results ratio of Word 2007 is superior to that of WordPerfect 5.1.
It's *not* always just used to "pump up" the eye-candy.
Not always.
Dave