I have come across an excellent online photo editing tool. Picnik offers all of the basic editing features that you would need for touching up photos. Resizing, cropping, rotating, colour manipulation plus added effects make this a very convenient application. There is an addon for Firefox and an extension for Explorer available so that with a click of the right-mouse button you can be editing any online image in Picnik.
Educational use: Any time you have students working on wikis, blogs, VoiceThreads, Photostory, PowerPoints, you name it, there is a use for this application.