Believe it or not, a free alternative to Photoshop has existed online for nearly 3 years. 3 years! The site is called pixlr.com, and what they have put together is quite remarkable.
As you can see from this screen capture, you have all the familiar tools from Photoshop, including burning, smudging, paint bucket, gradient, eye dropper, etc. You also have layers. Layers!
Additionally, Pixlr has done something very cool with their pencil tool. Unlike the simple block in Photoshop (which, as they point out in their blog, is little more than an blocky paintbrush tool). The Pixlr pencil can be set to plain, sketchy, trail, shaded, sticky, or ink. Right clicking the mouse allows you to quickly and easily shift between harder and softer brushes, as well as larger of smaller brushes. The sketch below was done in about two minutes using this tool:
In addition to having the ability to read Photoshop PSD files, Pixlr also lets you save work online (or downlading it) in a PXD format - essentially Pixlr's answer to a PSD file.
Even for those who have Photoshop, Pixlr provides an excellent resource when you're away from your home computer. And even when you are at home, those running slower machines will find that for many jobs, the speed of Pixlr (which loads almost instantaneously) will be preferable to the long-loading Photoshop.
Still not convinced? Head on over to pixlr.com to check it out.