In a lot of ways I agree with turrible_turrible's sarcastic comment on my writeup of the Photoshop Touch for phone announcement: "Everytime I use Photoshop I wish it was on a much smaller screen with fewer features!" (I did clean up t_t's grammar.) That was my initial reaction when briefed about the software, along with visions of my fat-fingeredness on the tablet version translating to utter frustration when trying to operate the program on a pint-size screen. Surprisingly, I experienced only a few of the expected frustrations, but still, some operations just don't translate well from tablet to phone, and feature weaknesses from the tablet version persist here.
PT for phone has the identical robust set of editing and compositing features as the tablet version, including adjustments and filters; warping, transforming, and adding text; brushes; selection and extraction tools; cloning; and layers and blending. You can shoot a photo directly into a layer. Output formats are JPEG or PNG, a flattened Photoshop PSD, or the native PS Touch PSDX format -- this last format can be opened by Photoshop CS5.5 or CS6 as long as you've got the appropriate patch installed. Sharing options tend to be governed by the API limitations of the operating system and the other apps you've got installed, so your mileage may vary there.
Keep in mind that this isn't a slap-a-filter-on-it or quick-retouch-and-upload app; if that's all you need, then there are far better and cheaper choices. In fact, while PT's selection of effects is passable, it doesn't offer nearly the breadth or depth of filters that more dedicated apps offer. But PT allows you to combine multiple photos with blend modes and complex selections along with all the essential retouching and correction capabilities. The app supports images up to 12 megapixels, and the number of layers you can create depends upon the image size: only three if you're maxed out on pixels, but increasing to as many as 16 layers as you shrink the resolution.
I tested it on a Samsung Galaxy Camera, which according to the Play Store isn't supported. (I'm still waiting to find out from Adobe why that is.) Installing directly from the APK file seemed to work fine, though I did experience some of the same stability problems that others in the Play store reported -- specifically, occasional freezes that required a Force Stop and restart. Performance, however, was pretty snappy. I suggest that before buying you scan through user reviews to ensure there are no known problems for your specific device.
One of the most notable differences between the tablet interface and the phone interface -- aside from the necessary rearrangement of the tools -- is the switch to a less interactive and somewhat insufficient help system. There are only five topics with only the briefest of instruction, and nowhere does it tell you what each tool does. While most people familiar with image-editing tools and techniques will probably quickly pick up the app's operation, certain things might still elude you. For instance, after making selections with the Scribble Selection tool (see my coverage of the tablet app), where you doodle over what to keep and what to delete, not everyone will know to then go to the selection menu and look for Extract. Instead, they'll probably do what I did: choose Cut. But Cut doesn't understand the scribbled Keep and Remove areas, and actually deletes the inverse of what you've selected.