is Intel's i5 processor 8th gen good for Photoshop?

Yes!

For the most part, Photoshop does not make much use of multiple cores, and clock speed is what counts.  You can find CPU specific, real world testing with Photoshop here

https://www.pugetsystems.com/all_articles.php?filter[]=Photoshop&filter[]=Processors

But like Graham says, there are other function where the i7 will make a lot of difference.  3D, as Graham mentioned, but anything to do with video.

if you want to do any 3d work get the I7

The 8th generation quad core i5 is in my MacBook Pro, and Photoshop runs great on it.

Of course an i7 or i9 would be faster and offer more cores, so when buying a laptop with current generation Intel CPUs:

• If your priorities are getting higher CPU and graphics performance in a laptop, choose the i7 or i9.
• If your priorities are reasonable performance with better battery life and lower heat, choose the i5.