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In case you haven't heard, Photoshop CS4 is shipping!
If you are considering upgrading to CS4 and upgrading to Lightroom 2 then you'll want to check out Scott Kelby's blog to find a great deal.
Lightroom automatically recognizes the newest version of Photoshop you have installed and sets it as the primary external editor. So, if you currently have CS3 installed then that is your primary external editor. As soon as CS4 is installed it will automatically become the primary editor, and all the advanced Lightroom-Photoshop integration (open as smart object, photomerge, HDR and open as layers) will work just the same way as it does with CS3, except you will now be sending photos to CS4.
Lightroom 1 will also automatically recognize CS4 and make it the primary external editor, but Lightroom 1 doesn't have the same level of Photoshop integration as is found in Lightroom 2.