There are many easy, and free, browser-based applications to resize and add effects to photographs. Adobe Photoshop Express just become the newest one (thanks to Webware). And another one, FotoFlexor, just revamped their site.
I’ve certainly found sites (and you can find a lot more on my website at Photo-Editing) like these useful in resizing images. However, I think that students can easily spend gobs of time playing with their pictures without any real learning taking place.
If I want students, particularly English Language Learners, to do something creative with images (apart from including them in slideshows) then I send them to Student Photos where there are a number of sites listed that they can use to easily add speech bubbles or captions. That’s a useful language-learning activity.