For $100 more going i7 is the best performance to cost ratio. Basically if you have hyperthreading, rather then just having 4 cores like the i5, its 8, so twice as fast. Add too that, they are both faster to begin with, so you are getting a CPU which is more then twice as fast for less then 50% more on top. It really is worth it, more then any thing else you could spend the money on.
Ram wise if your really going to be using Photoshop only then its not hugely important, but if you get into 3d or after effects thats when you will want it, but that is easy to upgrade later if you need it.
But really spend just a bit more on the CPU, you will not regret it.