Phantasmagoria Image Effectizer is a free image editor & adds eye catching effects to pictures. With Phantasmagoria you can create cartoons, IM avatars & even various text effects.
Phantasmagoria is perfect for creating photo morphs & creating photo montages. It has all the functions to import & merge graphics & for creating text effects.
Although not as sophisticated as Adobe or Corel, Phantasmagoria is a great free picture editor for creating some nice photo effects.