@ weetsie - catalogueing: think of your computer as a huge filing cabinet with lots of drawers, folders and files with pictures stored anywhere and everywhere - catalogueing is like a huge index card system for that filing cabinet, it creates a database of all of the images using their exif data so you can immediately sort by, for example, date taken, camera name, etc (and so much more). Both Elements and LR do 'catalogueing' but LR is so much more powerful.
My suggestions to the OP:
(1) If you are just shooting jpeg's and don't have tens of thousands of photos to catalogue but fancy getting a bit more creative with your post-processing, get Elements (this is how I started with PSE3 right up to PSE8).
(2) If you are shooting RAW files and have a big collection of RAW files, get LR. Elements has basic Adobe RAW but the RAW editing in LR is so much more powerful.
(3) If you have a large collection of photos and want to get more creative with PP then, IMO, you need both PSE8 and Lightroom.
It also depends of course on your workflow and how much post processing that you do. I do 90% of my post-processing in Lightroom: photos get imported and I rename them them automatically. I do a quick run through of the imported photos and bin those which are obviously no-good. I then run through spending 10/15 minutes on each photo, crops, tweaking white balance, levels, etc, and that's it. I hate being sat in front of the computer so want life to be as quick and easy in this regard as possible. If the photo doesn't look 'almost right' from the outset I don't try and save it in PP I just bin it! However, if I do see a shot where I think there may be more scope for improvement or I want to be a bit more creative then I go in to Elements.