For the more general question, "Is photoshop elements good enough for website mockups?", it is good enough. For web work, Elements is surprisingly adequate - it's got most of the key features in some form, including layers.
Most of the differences between full Photoshop and Photoshop Elements are about convenience, speed and workflow: so the money for full Photoshop may pay for itself when time and productivity mean more money coming in, but when starting out or doing occasional knockups, you can do most of what you could do in full Photoshop using Elements (just maybe not so fast and using more workarounds).
A few limitations of Elements I'm aware of:
- You can't customise keyboard shortcuts and are much more limited in customising the interface, workflow, actions etc. Fine if you're not busy rushed off your feet with design work.
- While it supports layers, it's not so good for really complex multi-layered images (e.g. working with multiple groups of layers) and more advanced layers features like the full range of adjustment layers. Fine if your images are reasonably simple, which typical knockups will be.
- It's not good at preparing files for professional print. Fine if you're working for the web.
- It's not so good for advanced fine photo editing. Fine if you're using it for design.
- The interface isn't so familiar to experienced photoshop users. Fine if you're new to it (actually, I think in many cases the Elements interface is better designed, certainly for newcomers - though finding tutorials will be harder)
- It's not so good for fine typography and text controls. Fine for web knockups because the web isn't so good for fine typography either...
- Less time-saving features like slices (personally I rarely used these anyway)
- No animated gifs, apparently... but there are plenty of animated gif makers if you really really want one...
Those are the main ones from my experience/memory, see also comparisons (e.g. 1,2).
If you're looking for a cut price Photoshop alternative for web design, also consider:
- Adobe Fireworks. It's purpose-designed for web/mobile UI design and has some great features, particularly, mixing vector and raster designs to make it easier to make elements that are pixel-perfect and can be scaled up and down. Price is about half way between Photoshop and Elements. The downside is, it's buggy. It's often talked about as Adobe's less favoured child, full of potential but locked up neglected in the attic with nothing to eat but fish heads, unable to develop fast enough. There are many good photoshop / fireworks comparisons: here's one that covers the pros and cons well. Edit: Adobe have since killed Fireworks, because Adobe.
- Pixelmator. I've never used this personally, but if you're on a Mac, it's a cheap option that gets very positive reviews from some people. The most common complaint I've heard about it is that it's no good for print design. That said, when it was last discussed here in 2011 the verdict was it just wasn't up to the standard, and it sounds like even people on Pixelmator's own forum agree it's no substitute, but it might be the best option if your needs are simple.