When using LR4 BETA and completing the work in CS4 by pressing Cntrl E.... Is their a disadvantaage to using CS4 vs CS5? I guess the question Im asking is when LR4 is released is it also necessary to upgrade photoshop for basic editing.
It won't be "necessary" to upgrade your Photoshop. However, if you want to take full advantage of the interaction between Photoshop and Lightroom it will be necessary to have Photoshop CS6. That will be necessary for things like using smart objects. Lightroom 4.0 will require Camera Raw 7.0 to interpret raw images. If you want to use an older version of Photoshop then it will be necessary for Lightroom to render the image to TIF or PSD image first, and then send that image to Photoshop. It still works quite well. In the past I have worked with Lightroom 3 and Photoshop CS3 (which was an older version with an older version of Camera Raw), and it worked quite well, in my opinion.