Windows only: Paint.NET is a free, fast and powerful image editor for Windows. It's a giant leap above Microsoft Paint and a serious alternative to bigger, bloated (for most users, at least) image editors like Photoshop or GIMP.
(Click the image above for a closer look.)
We've highlighted Paint.NET in the past, but it just released its first significant update in years, so we'd recommend grabbing the latest. Paint.NET handles most of the basics you'd expect from advanced image editors, and the update has added new effects (including new blurs and distortions), better performance (though Paint.NET has always been really light and fast), and a complete refresh of the user interface (enhanced for Aero/glass). Check out the release post for a more detailed changelog.
If you need to do the occasional image tweaking or heavy image-editing but don't want to spend a lot of cash on Photoshop or dive into GIMP, Paint.NET is well worth the download. It may not be able to do everything Photoshop does, but it can do everything most users need. Paint.NET is a free application, Windows only. Thanks Paul!