Picnik
This really is a beautiful gem.
It's integration with other popular Web 2.0 sites is simply breathtaking, literally. It has the ability to upload photos from your computer, Flickr, Picasa Web, Facebook, Myspace, a website URL, Yahoo Search, *gasps for air*, Freewebs, Photobucket, and Webshots; oh yeah it'll also grab from an external web/video cam, awesome!
Picnik is an online image editing program, and while no comparison to the divine Photoshop, it has some pretty useful tools. Among them are: rotate, crop, resize, exposure, colors, sharpen, red-eye. Additionally you can add effects, text, shapes, and frames too.
After uploading and successfully editing your image you can then publish the picture to the same sites listed above, save them to your computer, print, or email to a friend or website.

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