There are plenty of tools for editing photos and a lot more which we can do the same online. I think among the desktop tools "Adobe Photoshop" is a good on image editing. I have found a site that I felt it is similar to Photoshop but online (seems it is using flash). And it allows us to get the images from websites and local machine to edit and to save on local machine or on image sharing services (like flickr).
I have shown a screen shot of that web site and here is the URL of it. http://www.splashup.com
I think this is a good tool for using when we do not have installed Photoshop on our machine. If you have known any better tools online please do share it.