picozu

is an image drawing and photo retouching application built on Javascript, HTML 5 and CSS3. Make sure you use a modern browser (Firefox 5, Safari 5, Chrome, Opera 10, Internet Explorer 9) if you want to play with it.

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Aviary

Aviary is a suite of  web-based multi-media applications primarily for image editing and graphic design. The individual tool names are bird-themed, hence the suite name.

Aviary have 2 plans: a free plan and a Pro plan. Only Aviary Pro members can test current alpha releases ahead of time. Pro Members also have the ability to remove the Aviary Watermark, create groups, and view Premium Tutorials as well as unlimited storage.
The great thing about Aviary is that they provide the option to store your images online and host them for you. This is handy for centralising your images and saves cluttering your hard drive.

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PhotoPlus

For a long time, Serif has given away previous versions of their software to entice users to purchase the current version. Currently you can download a completely free, fully-functional version of PhotoPlus.

PhotoPlus 6 is an Offline image editing software that enables you to create, manipulate and enhance photographs or bitmap graphics. You'll find all you need to produce professional looking images for print and the web.