Paint.NET, a free graphics program written in .NET has been released. Here's the Paint.NET - Roadmap and Change Log. I'm actually a big fan of this program. When it first came out I basically said "meh", and since then I've changed my mind. My original complaint was that it was a really lame version of photoshop, with funky (but useless) transparency resulting in basically a glorified Microsoft Paint.
However, MS Paint is far too lame to do some things, and Photoshop is far too big and complicated for simple tasks. For what I do at work most of the time (taking screenshots, minor editing, cropping, etc) this program works just fine. It also updates itself nicely and is fairly fast. I'm sure that there are other alternatives out there, but this one is free and decent. Hey, the default save format is PNG, which out to tell you something :) (well, if you're geeky anyway). Maybe someday Microsoft will replace the aging MS Paint with something like this in it's Windows releases.
Oh, and there's a mono port in progress, which means that this could be a contender to replace (or augment) The GIMP for graphics work on Linux. Honestly I think that the functionality of Paint.NET is pretty close to the GIMP (from the user perspective anyway, it has layers and effects and whatnot) and it's a more familiar environment UI wise.