GIMP (GNU Image Manipulation Program) is a free, downloadable, image editing program. GIMP is always been highly rated by various tech magazines and I use it at school and at home as an alternative to other software.
It is free, easy to use and easy to install. There is also a huge support community for it and the software is updated and improved often.
This is a great alternative to paid apps like Photoshop.While not as powerful or as useful for professional photographers, it is very powerful and it is more than adequate for teachers and students. Students and teachers can use this to modify pictures for class projects and much more. It supports layers, as well as a variety of editing and modification functions.
Aviary Falcon - online image markup
Free Graphics Resources
Picasa - free photo editing from Google