Is this an overkill spec for Pshop?
There is no such thing as overkill for CS5. When I was stitching 100+ megapixel panoramas on CS5, on my old C2D Mac with 4GB of memory and an SSD, it took a LONG LONG time and it used up all the RAM and about 70 GB of virtual memory on my SSD. Obviously, 16 GB of RAM would be great for CS5. Other than that, things should run nice and smooth on that set up.