While I swear by Photoshop for all things images, I created this portrait of Jake using GIMP, which is open source and free. It is advertised as about the same as Photoshop for its features and strength. I'm far from able to support those claims as it took me a bit of hunting through its very different interface for basic commands. So far, it seems to use the same keyboard shortcuts as Photoshop, and that saved me a few times. Not all features are where you'd expect them, and some of the terms are altogether different, if you're used to Photoshop.
But, so far, I think it's a solid example of graphic software worth checking out. And, it won't hog your hard drive space. http://www.gimp.org/