Photoshop Express is a free online photo editing program. While it lacks the full feature set of Photoshop (or even Photoshop Elements), it's straightforward, easy to learn, and offers some fun ways to alter a photograph. You can upload up to 2.5 gigabytes of photos or video and will receive a personalized URL to share with friends. You can easily email your photo or publish it on third party sites like flickr or Facebook.
The most fun will be had in the editing and decorating sections. Editing allows you to sharpen your photo, enhance highlights and shadows, pop a color, correct exposure, or add a tint. You don't have a "sliding" scale of results; instead, you choose from several options shown at the bottom of the screen. For example, if you choose highlight, you will see thumbnails of your photo with increasing levels of highlighting.
The decorating section allows you to add thought bubbles, titles, costumes, frames, and even animal or sports themes. Your options are limited (there are only a handful of fonts, for example), but this helps make the program easy to learn and simple to use. This would be a fun project to do with a small child. I think they'd delight in adding balloons and bow ties and silly hats to the family pictures. I know I did!