Paint.NET is free image editing and photo manipulation software designed to be used on computers that run Windows. It supports layers, unlimited undo, special effects, and a wide variety of useful and powerful tools.

Paint.NET 3.5 has finally been released. The new version includes new effects, performance and memory usage have been extensively optimized throughout the entire program, better startup performance, images open much faster - especially on single CPU systems, memory usage has been reduced, lots of Windows 7 features, etc.

Full release notes | Download Paint.NET 3.5 final

If you use Linux, try Paint.MONO.