GiMP is most likely the best graphic-editing program for its price ($0.00). I haven't had the chance to try it, since my interests required me to go out and purchase Adobe Photoshop for my Mac, but all in all, for attempting to get as close as possible to the power of Photoshop, I suggest GiMP from what I have read on the internet.

I personally use Microsoft Picture it! Photo Standard 9...
I think its the best piece of software around thats free and fairly simple to get your head round, whilst still be able to do some good stuff with it. Its pretty fast and very simple to use which is why I use it to edit almost all of my photos... (including selectively colouring / de-colouring etc. on some objects.) Look it up if you want. I've tried Photoshop CS2 and can say that it burns my brain its so difficult to get to grips with. I suppose if I had the time and money to understand it it may be worth it, but I'd go with this software. It doesn't have the "layer" ability as such, but you can have objects separately, so kinda the same thing... ish... It doesn't completely have the opportunity to go back for everything, but you can easily save layers / objects separately as usual. and ctrl-z is always an option for as far back as you like. If you are slightly careful it doesn't pose any problem at all.

I don't know of any free or cheap software that would have all the features you are talking about, like "smart objects" or layers / a huge array of filters that come unmatched with photoshop. So if you're gonna be needing a new program it may be worth using photoshop and getting a bit more RAM in your computer?

I sound like a microsoft employee (I could well be up to their standard after having wasted about £30 on useless support help for one of their games. They could not do anything, except guess everything and get me to try it out.)

Anyway Picture it rocks. and its years ahead of ms paint.

Nice a stripped down photoshop. Faster load

Mmm, I still prefer my Photoshop CS2 much more

I still use paint occasionally. Its only for like when my image editor act up and it has doen that one time. The GIMP I would think would bea better candidate alternative for paint and some of the high end products such as paintshop pro and Photoshop.

I used GIMP for some time and liked it, but when compared to professional image editing programs, it's only okay.
The new version is more stable than past versions I've worked with. For simple image editing, it gets the job done with straight-forward recognizable tools and good compatability with multiple formats. Essential capabilities such as masking and working in layers are present. There's also a pretty good array of filters.

But the tools availabe are inadequate for doing advanced modification of an image or creation of an image from scratch. I pretty consistently find that there's something I want to do, but there's no easy way to do it. The array of selection tools leaves something to be desired (for example, I haven't found a polygon selection tool). The Gimp can be a bit gimpy from time to time

Paint Shop Pro would be a good alternative if Photoshop isnt installed on a particular computer, otherwise I just use Photoshop.

lol i dont even have that ms paint on my pc now..
more usage of photoshop these days even my 8 yrs old cousin uses it..

I think GIMP is the best alternative to Microsoft Paint. Although GIMP is a little bit slow, I think it is still a good piece of software. GIMP is expanding too. You can expect to see more functions provided by GIMP in the near future. I like GNU project a lot...