I can also confirm that it works fine. I have a first gen (2006) Mac Pro 1,1 2x 2.66GHz processor with the bog standard 256MB Nvidia GeForce 7300 GT graphics card. I've got 11GB of RAM. Totally agree that you can never have enough memory! I'm running Lion as the Mac Pro 1,1 won't run Mountain Lion due to its 32-bit EFi, but I expect you know about that already.
I use Photoshop CS6, InDesign CS6 and Acrobat Pro X (haven't tried XI yet). I've also used (but not extensively) Illustrator CS6 and Premiere Pro CS6. I had to give up on Dreamweaver CS6 as it has a slow typing bug, but that's not exclusive to the old Mac Pro, there are plenty of people with more up to date machines who have had similar issues with it. I hear that's been fixed in DW CS6 12.1 but I've switched to Coda 2 so can't confirm that.
Although I'd very much like to upgrade my Mac Pro, I can't help but be impressed that an old machine is still performing very well indeed.