Photoshop edits not saved in iPhoto

I've set up Photoshop CS4 as my external editor in iPhoto, and this has been working well for quite a while. I usually edit in Photoshop and save over the original (both jpeg files) in iPhoto. However, today I noticed that my edited work was not showing up in the gallery view (i.e. even after saving over, the original version of the photo was shown in my gallery). On close-up I can view the edited photo, but once I edit another photo the previous photo I edited reverts to its original form. I've tried repairing the library and permissions by pressing option + command on startup, but the problem still remains. None of my edited work is saved once I close and reopen iPhoto. Please help! :-(

You are saving as a jpg (if the original file is a jpg), right? Check this workflow and see if you're doing anything significantly different than what's described.  Screenshots are from Photoshop CS3 but should be similar to later versions.
Using Photoshop or Photoshop Elements as Your Editor of Choice in iPhoto.
1 - select Photoshop or Photoshop Elememts as your editor of choice in iPhoto's General Preference Section's under the "Edit photo:" menu.
2 - double click on the thumbnail in iPhoto to open it in Photoshop.  When you're finished editing click on the Save button. If you immediately get the JPEG Options window make your selection (Baseline standard seems to be the most compatible jpeg format) and click on the OK button. Your done.
3 - however, if you get the navigation window
that indicates that  PS wants to save it as a PS formatted file.  You'll need to either select JPEG from the menu and save (top image) or click on the desktop in the Navigation window (bottom image) and save it to the desktop for importing as a new photo.
This method will let iPhoto know that the photo has been editied and will update the thumbnail file to reflect the edit..
With Photoshop Elements  the Saving File preferences should be configured as shown:
I also suggest the Maximize PSD File Compatabilty be set to Always.  In PSE’s General preference pane set the Color Picker to Apple as shown:
Screenshots are from PSE 10
Note 1:  to switch between iPhoto and PS or PSE as the editor of choice Control (right)-click on the thumbnail and select either Edit in iPhoto or Edit in External Editor from the contextual menu. If you use iPhoto to edit more than PSE re-select iPhoto in the iPhoto General preference pane. Then iPhoto will be the default editor and you can use the contextual menu to select PSE for your editor when desired.
Note 2:  editing a RAW file with either PSE or PS creates a new file which must be saved outside of iPhoto, i.e. the Desktop, and imported as a new photo into the iPhoto Library.

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    Click to view full size
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    Click to view full size
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    This method will let iPhoto know that the photo has been editied and will update the thumbnail file to reflect the edit..
    NOTE: With Photoshop Elements 9 the Saving File preferences should be configured as shown:
    Click to view full size
    s  I also suggest the Maximize PSD File Compatabilty be set to Always.  In PSE’s General preference pane set the Color Picker to Apple as shown:
    Click to view full size
    NOTE: If you want to use both iPhoto's editing mode and PS/PSE without having to go back and forth to the Preference pane, once you've selected PS as your editor of choice, reset the Preferences back to "Open in iPhoto".  That will let you either edit in iPhoto using the Edit button or Control-clicking on the thumbnail and selecting "Edit in iPhoto" or in PS/PSE by Control-clicking on the thumbnail and selecting "Edit in External Editor" in the Contextual menu.
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    Do you Twango?
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