Arguably, Picnik is the most popular web-based photo editor. Why? Because it’s now integrated with Flickr.
Very polished interface. Tools and palettes are modeled after Photoshop. And it has layers!
Part of the Aviary suite of creative apps, Phoenix also offers layers and compositing.

Nice, simple, and clear interface, with no ads at all.
flautR offers a cornucopia of image tools, boasting thousands of photo effects. If you want to make your photo look like a cheezy painting, this is the place.
