Paint.net

Freeware: Enhanced Paint Program

If you use the Paint graphics program built into Microsoft's operating systems, you have probably wished from time to time for an enhanced version. You don't need all the fancy features (or high price) of packages like Adobe's PhotoShop or even Corel's less expensive but still a little pricey PhotoPaint, but you'd like a little more than Paint offers, and you'd like it at no cost. No problem! Some folks at Washington State University got permission and help from Microsoft in making a new version of Paint, which they call Paint.NET. It will do a lot of the things that the commercial graphics programs do. You can even use layers.

http://www.eecs.wsu.edu/paint.net/