Yes, while you can zoom in, crop, rotate and apply effects to still photos in your video project, resizing and optimising your images is best done with a dedicated photo editing program - e.g. Photoshop, Photoshop Elements, GIMP, or any other of the multitude of photo editors out there.
Most tend to buy the Premiere Elements / Photoshop Elements bundle as they integrate quite nicely. With either program you also get the Elements Organizer program.
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While PrE is geared a bit more towards working with Video Assets, it is a very good SlideShow creator, if one is going to a Video file, DVD or BD.
As Neale states, the combo of PrE and PSE is very powerful, and from PSE's Organizer, one has a few more SlideShow options, but PrE can do much of that too - with maybe a few bits of automation not available. I create all of my SlideShows in PrPro, but though it is slightly different from PrE, the functions for creating SlideShows are almost identical.
Now, where PSE (or Photoshop) comes in very handy, is, as Neale mentions, with Scaling your Still Images, to match the Frame Size of your Video Project. The quality, out of PSE/PS will be better, than doing that Scaling in PrE. Also, the processing overhead on your computer will be greatly reduced. This ARTICLE goes into more detail.
Now, are there some SlideShow functions, that you are specifically looking for in PrE? It is very likely that someone can point you to those, or suggest doing those operations in PSE first, and then finishing the SlideShow in PrE.