I've been following the events closely and was trying to figure out how this will affect the industry. What has gone down is clearly a goof, not a marketing plan. Some say that it will help sales of CS5/6; others say it will hurt them. My best estimate is that the net effect on CS5/6 sales will be close to zero. However, as parent stated, if Adobe doesn't walk back their "permission" to use CS2, they have effectively killed off Elements. PS has the much higher price tag, but I'm sure that Adobe makes much more money off of Elements due to volume.
Elements: dead
Paint.net: dead
GIMP: dead on Windows
any other photo-editing software already struggling to survive: dead
Aside from PS, the other big release was Acrobat 8 Pro. This is really bad for Adobe, too, as there are no free, _usable_ tools for creating PDFs. Acrobat 8 Pro has everything most people would need to create PDFs, so this particular goof will definitely hurts sales of the modern version.
Adobe is between a rock and a hard spot: kill major sources of revenue or take on a PR nightmare. If I were them, I think I'd take on the PR nightmare instead of losing Elements and Acrobat. Let's see how this plays out.