Thanks for all the comments - I'm thinking Intel because I'm very familiar with them, I'm sure AMD are just as good, but I just think of them as running a lot hotter than Intel and potentially more troublesome in a small case without a fancy cooler.
I'm a bit stuck for space so am looking at a small barebone system, like this one on Amazon (only £99!!) - Asus T3-P5945GCX. I'll couple it up to an Intel E8500 3.16 GHz cpu and be happy for a year or three. I think this with a good HD, 4Gb RAM and may be a better graphics card will run CS4 and 12 Megapixel Raw's without too much trouble. I will be sticking with XP 32 bit because it's what I've got - appreciate some of the ram won't be used, but never mind.
I'll read Tom's Hardware's take on the differences between cpu's when I'm feeling a bit stronger - he's extremely Teutonic in his thoroughness, isn't he - it's been a hard week at work!!