Once I found Aviary, my search for online image editing tools came to a close, but here (for nostalgia's sake) are the tools I used to use:
I've been a big fan of Sumo and Splashup, but I think Pixlr might be an even better Photoshop-esque tool. Free. No download required. Great for schools. Great for home. Powerful. Easy to use.
Edit images with ease and accuracy. Give it a try and let me know how it works for you and your classroom!
Sumopaint is basically Adobe Photoshop for free. The mainpage allows you to upload images and offers a help tab.
Design an assignment that takes advantage of this resource. Adobe is almost $700 on Amazon right now. Why not use the free version?
Splashup is the best free image editor I've seen. It is easy to use and full of great tools. While it does not have every bell and whistle of Photoshop, it will definitely get the job done. If you create something great, please attach it so we can all share in your artistic genius!