Here are a few programs that we have found useful, and recommend to those who need some editing power but cannot afford to by professional commercial software like Adobe Photoshop and Adobe Illustrator (see Adobe.com).
Paint.Net
Looking for freeware that is way more powerful than Windows Paint, but not as complicated as Adobe Photoshop? Try Paint.net out for size. Here are some of the major features:
Blender is the free open source 3D content creation suite, available for all major operating systems under the GNU General Public License. It has a steep learning curve, but even if you only learn to use 5% of Blender's power, you can do amazing things with the software:
GIMP is a versatile graphics manipulation package, and is perhaps the closest thing to Adobe Photoshop that you can get for free. It is useful for photo retouching, image composition and image authoring: