It really doesn't need to be a Photoshop competitor. Having a good app for basic image editing is what most people would probably appreciate.
Exactly, the average user doesn't really need a full-on image editing program, just something basic that performs basic functions with ease of use. Besides, I don't think Microsoft upgraded Paint to be a Photoshop/Paintshop Pro competitor. That would take more resources than Microsoft would likely want to commit to an app that's built-in to the OS. Were it a completely separate program suite like 'Office' then perhaps so.
In any event, the upgrade to Paint is a welcome initiative.