It seems more like you are trying to build a photomosaic maker with support for masks.
Does Photoshop not do this?
It's slightly different than a mosaic. Mosaic software usually crops all of your photos to have the same aspect ratio. With this algorithm, the original aspect ratios are maintained so the photos fit nicely and nothing is cut off.
Even if PhotoShop has these capabilities, it's not a tool for the masses. The goal of ScrapWalls seems to be making it easy for anybody to make the collage whereas not everyone has or knows how to use PhotoShop.
Good point. Also, doing something similar in PhotoShop would probably take a lot more time.
Also, you can't order a printed poster from PhotoShop.