http://www.gimp.org/
"GIMP is the GNU Image Manipulation Program. It is a freely distributed piece of software for such tasks as photo retouching, image composition and image authoring. It works on many operating systems, in many languages..."
I have been using GiMP more and more instead of Photoshop these days. If you know PS then the transition can be tough but a newbie should be able to pick it up easily.