Question:

"This is a totally weird problem I have never encountered.
Only in Photoshop my fonts will only come out as caps. In all other applications: Office, BBedit, Netscape (as you see here) its all good but no matter what I can only get caps in PS.
Even though my fonts are behaving elsewhere I still tried a different keyboard to no avail.
I did install some new fonts a few weeks ago but this problem did not manifest until just a few days ago.
Even if I copy and past from a well behaving application as soon as the text hits Photoshop its all caps.
I really and truly have no clue what could be causing this!
Any ideas?"

Answer:

In your 'Charectar' palette in Photoshop, there is a setting for all caps. This'll sometimes not reset across documents.
Was that by chance left on?

Reply:

"I owe you a beer!!

You hit it dead on target.
Thats exactly what was going on, I just checked. I wonder how that happened. I never use that all caps button.

Thank you!"

Tip lifted from: MacAddict's Forums