Note--this is the free stuff
it will work for the casual user and its hard to beat Picassa for the price and ease of use

Irfvaniew is one of the highest rated free programs and is more popular than GIMP
( an open source Photoshop knock off(LINUX)--I am not that impressed with GIMP--but it is free and does a decent job--just not as good as Photoshop)

if you have or want to buy an image editing program

Adobe Photoshop CS2-- or earlier version--Pro level--be prepared to finally understand what a "steep learning curve" really is to get the most from this program--
I love it but I have the background and 10 years of fooling around with it

Adobe PhotoshopElements versions 2,3 or 4--This is the one I recommend for most folks

Does most of what Photoshop does but without a lot of the pre press and history functions--has a more user friendly auto correction features but you can also perform custom effects--probably the best bang for the buck for most folks

You can download a demo copy at www.adobe.com

some folks swear by PaintShop Pro and Dabs likes Image It or some Microsoft image program

If you want ancient technology PhotoDeluxe (Adobe)
it is the precursor of PhotoElements and for all us folks that grew up using CHOPS (Channel Operations) it will still do the job (it is equivalent to Photoshop 4)I've still got copies of it that I will start a niece using so when she gets to Photoshop she will already have a good idea of how to do some things.