I've worked with psych nurses ranging from diploma to MSN. I started in psych as an ADN. LVNs are also in psych. That being said...some facilities prefer degrees over diplomas, or prefer BSNs over ADNs. Ironically, most psych tech jobs require a 4 year degree, but nursing is all over the place.
As far as finding a slower-pace setting....good luck
Seriously, despite rumors to the contrary, psych nursing IS more than babysitting drugged-up or depressed patients. Nights may be the slower time in medical nursing, but in psych that's when a lot of our psychotic patients come to life. You could try looking for the less acute units (open units, residential, partial hospitalization), but definitely be prepared for anything to happen at any time.