There’re few photo apps better than MacPhun’s FX Photo Studio for the casual photographer. It’s got a pretty interface, it’s super-simple to use and it’s stuffed with way more filters than any other iPhone app at the App Store (pretty sure this is true; if you think you know of one with more filters, let me know). Normally the app is $2, but today it’s free.
Then there’re are the other great features, like being able to open photos from Facebook or from documents on your iPhone to work on; and the ability to grayscale your image, then selectively color certain sections. The other editing controls are fairly simple, but that doesn’t matter — it’s the effects that are key here.
There’s also an HD iPad version, unfortunately not on sale today.