I actually use both.
In a way, iPhoto is more like Aperature for iPad where the Adobe is more like Photoshop. Same kind of balance here.
I use the Adobe more to do crazier effects, clipping art to use in other images and smoothing them in, or mixing multiple images together. iPhoto (like Aperature on the computer) is one I will go to in order to do photo image enhancements.
iPhoto is incredibly good at photo *touch ups*, balancing and stuff. It's also faster at doing them (from a usability factor) than Photoshop and just about any program you use on the computer. Just using the brightening tool in iPhoto is, by far, the quickest and most user-friendly interface I've used. And that's comparing it to everything else, so far. Including computer software. Also, due to it being new, iPhoto has some pretty nifty sharing options. You'll also want it if you have multiple iOS devices (like if you use your phone camera a lot) since you have no network or computer requirements needed to beam photo libraries from one device to the other.
So oddly enough, iPhoto wins by interface. I've done around 30 photos with alterations in an album in iPhoto faster than I've ever pulled off in any other software I have. It's also nice in how it retains your current work settings even when bouncing between photos making it that fast to utilize the same effect (including ones which you manually apply with your finger). For example. Why mess with zoom settings and brush size settings when iPhoto allows you to pinch zoom automatically giving you extra precision for applying an effect without having to even go through selection menus? By the time the Photoshop user is done with just one change of zoom and brush to change the level of precision, I've already applied it and moved onto the next picture.
For about $5, I would give it a go. It has a small learning curve, but once you understand what brings up effect selection, the rest is pretty intuitive. iPhoto also has smart interpretation of certain effects as well based on where you decided to press and hold your finger in the picture, bringing up information of what you'll apply if you drag your finger in certain directions. If you want to do color balancing, and touch up work, iPhoto is the better tool. If you want to do something wild like combine photos and/or turning a picture into a water painting, use Photoshop touch.
In short. Use Photoshop more like an Art tool or Photo Manipulation tool. A paint brush with the ability to work with Photos. It has a number of effects that is outside iPhoto's realm of photo enhancement. While there are a number of photo manipulation effects in iPhoto, Photoshop has more of them. There are some interesting Photoshop-only features. In particular for "cloning" like the ability to offset a brush so you can view your brush to clone away from where your finger actually is.
Use iPhoto as a Photo-enhancement tool, it's more localized in its application, but for what it does, it does it just a professional-looking and with a better interface for the casual user to get it done a lot faster.
