There are limitations to using to running it on that size screen which make parts of the user interface difficult to see and use. This is a popular feature request though so please add your votes and comments if you haven't already.
I created a new idea thread here, photoshop touch specific:
We already have one for support for all touch apps on that tablet here:
I'll take difficult to use any day versus not working at all.. Thanks!
I too would like to see this. I have a Xoom, but find I use my Nexus 7 all the time and would rather use it for PS Touch. The resolution is the same as the Xoom, so even if things are a bit smaller, I would much rather use the N7. Please add support.
with the newer update of PS Touch (1.4.1) you should be able to run it on the Nexus 7 too.