I use Adobe Photoshop CS2 and MS Paint. Basic, but efficient. I don't do much photo editing, drawing, painting, etc. so I don't need much.
I also use Photo shop to edit the my photos. It is a lovely software and I have no problem with it.
I don't often edit photos, but when I do, I use Paint Shop Pro 8, because at my skill level ( :'() it doesn't matter what I use, the result always looks bad. :-[
sometimes i was trying to use overcomplicated software such as GIMP
but for most cases, i prefer ImageMagick :-[
as far as image editing is not my job i'd never used or ever tried expensive professional tools like PhotoShop and other.
Also, i'm like manuel, mine result always looks bad too:)
Try reading this:
http://www.instructables.com/id/basic-photo-editing/?ALLSTEPS
Some good solutions in here too, with a guide to basics.
I use Photoshop that I got with a Wacom tablet. It's WAY too heavy for quick edits though, and for pixel art I prefer to use a more lightweight program. I don't like MS Paint but it's ok if you just want to do something really quick and simple. I've given GIMP a shot many many times but I can never really get used to it.
For pixel art I use iDraw because I'm so used to it. The programmer's homepage is most likely lost long ago but it can be downloaded here: http://www.rpgmaker.org/downloads/view.asp?id=248. It's very simple and easy to use and have a simple tool for testing how your sprites looks like when animated. But it's far from perfect, can only use 256 colours for instance because it's initially made for drawing characters for RPGTkool/RPGMaker 2000 (works great for mostly any kind of pixel art though) and no layers.
I've given Graphic Gale a try many times and I kind of like it but I still always end up going back to iDraw. I heard Aseprite (http://www.aseprite.org/) also is good for pixel art.
I prefer to use PS for pixel work, I find the layer system really helpful and the program itself much more intuitive than MS Paint. I am sure there are better programs for pixelling though, I know Graphics Gale is popular.
I used to use Photoshop, but I stopped pirating software around 2003, so now I use Gimp primarily. I'll occasionally use ImageMagick for batch processing. Gimp can do batch processing via a plugin, but it's way slower.
I bought GraphicsGale a little while ago and I'm still learning my way around it. I had a certain workflow that I followed in Gimp when I did any pixel art, and I can't really recreate it. So, I'm basically trying to come up with a new workflow.
Paint .net is a free photoshop clone.