This is a fairly common question that gets asked of the fine-art photographer, and as such it would be really handy if the answer could be a simple "yes" or "no." Unfortunately, as any photographer who has advanced at least to the level of shooting in RAW can tell you, it's not quite that straight-forward. The average consumer with a digital camera knows how to point the camera at their subject, zoom in our out, maybe adjust a few basic settings, and take the picture. The camera is designed to automatically do the best it can to produce a desirable image based on what it can gather about the picture that's being taken. It senses the range of colors coming in and tries to estimate the color of the light, which it then uses to modify its color-output to match (this is called "white balance," and since even very expensive professional cameras are only so-so at calculating it automatically, learning how to control this yourself is a great first step toward getting your colors to look right.) It also applies a certain amount of contrast, brightness, saturation and sharpening, usually based on which mode or "scene" setting it is in. It does all of this instantly and automatically, and then it gives you the result, which may or may not look much like what you saw through the viewfinder.
Nicer digital cameras give you the option to shoot in RAW. What this means basically is that instead of applying all of these settings and adjustments to your image, the camera will simply record the actual light-data that it gets from the sensor, and give it to you un-processed. The photographer then has to load the RAW file onto a computer and adjust all of these settings manually in order to get the picture to look right. The files are bigger, and it takes much more time and energy to produce a final result, but it gives the photographer much more control over the images that he or she is producing.
I shoot exclusively in RAW, so in a sense I "Photoshop" every image that I take. But another way of looking at it is that when the average consumer takes a photo with a digital camera, the image is "Photoshopped" by their camera before they ever see it appear on the camera's screen . . . I just choose to do it myself so that I can have greater control over the results. For those who don't have any experience with RAW, here's an example where I overlaid the finished product onto the un-processed RAW image.
As you can see, the un-processed RAW image looks washed-out and dull, the colors are all wrong, and it's much less "life-like" than the final image. So did I "Photoshop" this image, or did I use my knowledge and skills to make the image more like what I really saw?
Take another example in this image that I took of surfers walking on the beach as the sunset:
Does this image look just the way I saw it when I took it? Not even close. The scene was not nearly so dark, and the sky certainly did not look so purple to my eye . . . but in this case, shooting directly into the sun caused my camera to confuse the color of the light, and I also chose to let my camera's meter automatically darken the whole scene to compensate for the very bright sun. I could have used my exposure compensation to brighten the whole scene to be closer to how I saw it, and I also could have gone in afterward (since I shot in RAW) and corrected the camera's white-balance mistake, but I liked the silhouetted look, and I found that the colors created by the incorrect white-balance created a scene that felt more like a beach sunset, so I let it be. This is a case where I could have actually "Photoshopped" the image to make it look "more realistic" to what my eye saw in that moment, but I chose not to.
This also brings up an interesting attitude that has developed with regard to photography: there seems to be a precedent that if something can be done in-camera, then it's ok, but if you have to put it on your computer to do it, then it's somehow cheating. There are two main reasons that this is a fallacy. First, it assumes that what a camera does is record reality just as we see it. If we think about this, we all know that's not true, and in fact I think that's part of why we like photography. Take this image, for example:
To create this image, I used my 105mm macro lens to get very close to this flower, and shot with a wide aperture to create a very shallow depth-of-field. Sharp focus draws your attention to one specific area in the photo, while the rest fades away into soft focus. I don't care how long you look at a flower, you're never going to see that, because your eye doesn't work the same way a camera lens does. That's part of what's so cool about photography.
The second reason it's a fallacy is that cameras are computers! Look at this self-portrait that a friend of mine took, using nothing but "in-camera" settings:
He happens to use a Sony brand camera, which are known for allowing more strange/interesting things to be done "in-camera" than most, but I wanted to give an extreme example to make the point. Modifying an image using your camera's settings is no different than modifying an image using computer software. You can either do so to create a realistic image, or you can do so to create a fantastical image - and what most people don't know is that every single digital image that has ever been taken, even on fully-automatic cameras, has been modified in some way by software to create the final product. So, in reality, we have a choice: we can "Photoshop" our images ourselves, or we can let our cameras do it for us. Even people who use film cameras that have purely analog adjustments are using technology (lens, aperture, film, length of exposure etc.) to create an image that may or may not look like reality.
I think that generally when someone uses the word "Photoshop" as a verb, they probably want to know if I am adding or removing colors, objects or other elements to my photos in order to create a scene that didn't actually exist. They want to know if I am tricking them, so even though I post-process every single image I take on my computer, when I hear that question the simplest answer is usually "no" . . . I'm not trying to trick anyone. When I do use Photoshop to make major changes to an image, it's usually pretty obvious that I've done so, like in this image:
In this case, all I did was convert to black & white, then flip the image up-side-down to create an unusual perspective. There seems to be common agreement that it's not "cheating" to shoot in black & white, even though it creates an image that is clearly unlike the scene that was being captured, and I think it's largely for this same reason: everyone knows the cat wasn't actually black and white, so even though it doesn't look "real," there's no deception going on. The same applies to flipping the image so the cat appears to be on the ceiling instead of the floor.
So . . . do I "Photoshop" my images? Yes, always, and also no. A skilled digital photographer must process every image in order to get the image they are after, but I'm not out to trick anyone with the images I create.