I monitor one of the Photoshop Elements user forums, and the "official" PaintShopPro user forum. Here are my impressions of what the users of those programs do with their software, and some of the issues they are having:
Photoshop Elements (PSE)
- These users are mostly casual photographers who are intimidated by "complex" software; and who only do the most basic, simple image editing.
- Even so, now that they've spent some money on a fancy digital camera they're upset and wondering why they can't use the PSE editing tools and layers on their 16-bit RAW images.
- Some users are also beginning to wonder why PSE doesn't have adjustment layers for some basic things like Curves and Sharpening.
- The lack of any vector drawing capability upsets those who want to do some fancy greeting cards, etc.
- These users fall into two basic categories:
- Digital scrapbook users. It seems to me that this is a very large user base.
- Advanced amateur photographers who want to do a fair amount of "tweaking" to their photos.
- For both categories of users, the general bugginess of Corel's software is becoming more and more of an issue. This is true even (and especially) for the newly released PSP X7 version.
- Both categories of users also complain extensively about the lack of response and support from Corel when bugs are found.
- For the (b) amateurs, there are some who want to have the advanced editing capabilities of Photoshop, but are put off by its high cost, even when "renting" the application through the Creative Cloud subscription.
- These (b) amateurs feel limited by: the small number of available adjustment layers (about 13), the lack of layer and group manipulation (aligning, centering, etc.), and the difficulties of working with individual colour channels (and a few users bemoan the lack of support for CMYK).
- PSP's problems integrating with other software and 64-bit peripherals is becoming more and more significant.
- In short, these (b) amateurs are really looking hard for a lower-cost alternative to Photoshop.
- For the (a) digital scrapbook users, they use PSP's "Picture Tube" (the "Stamp" tool in PhotoLine) a lot, but PSP's Picture Tube has far fewer controls than does the PL Stamp tool.
- These (a) users are upset that they cannot fit paragraph text within a user-defined shape, even if they spend money on third-party scripts.
- Both categories of users suffer from not having a real Gradient tool that works simply, directly and precisely in the main editing window.
- The lack of a Clipping Mask function is also affecting both categories of users.
- PSP's layer styles are crude, old-fashioned and severely limited. For some reason, both categories of users accept this as "normal".

Comments are definitely encouraged, especially if you've used Xara (which severely disappointed me when I tried it a couple of years ago).
Where, why, and how do you think PL can make significant inroads in the image editing market?
Edited:
Added point #11.
Added point #12.