Paint.NET is a free photo editor for Windows which features layers, blending modes, special effects, unlimited undo history, and a number of image adjustments and filter effects. Besides the standard pixel-based painting and selection tools, Paint.NET also includes easy to use tools for drawing shapes and lines, a text tool, a clone stamp, and a recolor tool. The newest version adds (among other things) gradients and more effects.
Paint.NET is laid out very simply so it should be very easy for most people to start using right away. It is certainly a much better image editor than the Microsoft Paint program included with Windows. In addition, it is free to all and open source.
As a long time Photoshop user I can tell you that the ability to work in layers is worth it’s weight in gold and is feature I have not seen before in any free photo/graphics editor.