About CD cover, you may want to use the program designs specific for CD cover like SureThing which will handle CD cover much easier, faster, and better than MS Publisher, Photoshop, word processor, Corel and the alike.
About the printing quality, it often depends on the printer's setting, paper etc. I use Epson Photo (inkjet) printer to print graphics, portraits etc. and the quality is often better than the print from regular 35mm camera (the digital images print by photolab always better than by inkjet). And I don't print text to know much about it.
Anyway, I am Photoshop user and do use Photoshop for retouching (some days I do hundreds of them before send to Wal-Mart for printing) and printing.