If you are talking from a web design point of view Adobe Photoshop is amazing. If you are talking from a photography point of view I don't know.
so far the best photo software is Photoshop. but you can try CorelPhotopaint or Ulead Photoimpact too
Lightroom does some amazing work in optimizing graphics for the web. Really good quality and minimal file size. Highly recommended. Photoshop CS3 is a class apart. Fireworks CS3 is also very good. GIMP is a freebie option
Yes, if you want to be legal and you're with not so big budget - try GIMP for photo and graphic manipulations. On the other side is Photoshop.