Montage-a-google is a fun tool that lets you create large, colourful montages using Google's image search. Not only is it an interesting way of browsing the net, it can also be used to create desktop pictures or even posters.
Iaza is a web-based image editor that offers lots of features in a simple to use interface. While many sites offer simple conversions from one file format to another and can do the basics of image editing (re-size, crop, rotate, etc.) Iaza also offers some basic animation tools as well and makes it very easy for teachers and students to create avatars for online websites or blogs.
Storyjumper is simple to use with primary students. The program comes loaded with backgrounds and images for many themes. The only downfall is that there is no embed code available, but you can provide the link to share the stories.