I say repeat Psych if you feel really, really, really confident and passionate about the subject.
I'll be repeating English - I only finished one essay in the final exam but still managed a 34 - but, there is no way anyone would be content with this score considering the incomplete exam (which was for me, due to mind-blanks and nerves).
I'm not repeating English on the basis that it is going to be a breeze the second time round.. or that it'll be any easier. Instead, I'm doing the subject again on the basis that I know I will be able to do better, if I get my time management and organisational skills down pat.
But also bear in mind that unless you get a really high, amazing score in Psych this year, the impact on your ATAR score will be very minimal. Your prospects for a higher ATAR would seem far more attainable with a 6 subject VCE program, instead of your proposed 5 subject program.