Good and bad I guess.... But now there is so little competition for 2d design w/ those two gone and turned into one. Paint shop pro can't even touch photoshop and illustrator and freehand/flash mx are the three best and well known vector programs out on the market. They also have 2d animation locked down with Flash and ImageReady (Although Ulead Gif Animator is nice). They also have the two best web applications on the market.
The nice thing is the adobe PSD algorithm will be placed into and will be fully compatible w/ Flash, probabaly, which is going to be a great feature for those who enjoy doing design in photoshop/illustrator then importing to flash. Same with the web apps.
What sucks - This is going to lead to a decrease in overall competition (even though photoshop has almost neared perfection and has little competition on the market) and decrease in new releases for things. The reason being is that without someone pressing at the others back to make another program that is bigger and better then the others they can sit back and relax.