The raw converter in the alpha of CS3 is pretty close to the raw converter of Lightroom, and I'll bet that the released raw converter for CS3 is very close.
Lightroom is a cataloging program that lets you make adjustments to photos quickly and easily. I don't think you can apply an effect to only one area of the photo (ie no selections), I don't think you have layers, but you do have lots of control over brightness, color, etc. You even get curves and lots of tonal adjustments. Lightroom lets you catalog (add metatags, rate, etc) lots of photos quickly and easily. Lightroom also has some slideshow and printing capability.
PS3 is a great tool to edit photos, especially if you want to work on one part of the photo, use filters or plugins, or do more advanced stuff.
The two programs work together, they don't exactly compete.
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