Okay. I got it fixed.
Problem summary: After installing iTunes 7 and QT 7.1.3 yesterday, I noticed that my Photoshop CS (8.0) would not open or create new images. I also went back to my PS 7.0 and it would not work either.
Deleting the Adobe cache folder and preferences did not help.
I ran MacJanitor to repair permissions, then downloaded the QT 7.1.3 installer from Apple and re-installed QT.
Photoshop works fine now.
Don't know if it was the permission repair then re-install or just the re-install, but the problem went away.
Best,
Jim