Adobe is one company that has made all the right moves in recent times (acquiring Macromedia being the prime example). This elephant can dance. Every product they have to offer is a de-facto industry standard. It comes as no surprise that they sense the threat Web 2.0 poses to their business and are moving to squash it by embracing it.
As far as competition is concerned, I think that until Adobe offers a widgetized version that can be integrated into other photo-sharing sites (which is clearly where the money is to be made in this market), fauxto/snipshot/et.al. don't have to get too worried...
The fauxto web site doesn't make it clear that they do offer a widgetized version. That change would help them.
The snipshot web site doesn't have news. Since they're a small startup, it would be reassuring to see activity there, for those of us thinking about integrating with them.