PSD files are generally a layered file that is proprietary to Adobe PhotoShop. However, this file format has become so popular over recent years, that many other graphic software programs (newer versions) have programmed their software to be compatible with this file format. Adobe PhotoShop is an expensive program, however, two programs that I know can open and edit PSD files which are less expensive and quite good are Jasc Paint Shop Pro 7+ and Ulead PhotoImpact 7+. I don't have any because I avoid proprietary formats, but gimpshop should be able to deal with them also..
