Yes, it's best when there is more screen space - but the UI being tiny is detrimental to work flow. It works well enough for quick projects, but as I said, it's not ideal.
The native scaled up mode is the compromise. It's not crisp by retina standards, but it will look just as good as any non-retina display. Once the photoshop update is released, using it at the native mode would be the best - the pictures won't be scaled (so you can fit huge pictures without losing detail), but the UI elements will all be large enough to manipulate