Pizap makes it not only easy but fast to make changes to images. There's an FX tab that allows you to apply special effects, much like many of the other online editors - poster, funky, M.C.Escher etc. There's the text tab, a great array of stamps (use arrows and tabs to navigate), including many human and animal characters, and lots of versatility like fonts, rotation, moving stamps.
Pizap will let you connect to Facebook, Picasa, Flickr, SmugMug and Photobucket to fetch your photos, or connect to your own computer or webcam. I popped the bird below into Pizap from Picasa, and added a silly hat and a caption. There are also some lovely backgrounds you can choose - these might just be the story starter your young writer is looking for. You can check out one background I used above - I added characters to a background, text to a speech bubble, eyes and horns to my snake and I scarcely scratched the surface so there really are lots of choices. You can save and share to Facebook, Twitter etc, and you can download your creation to your computer without registering. Signing up for free gives you the chance to save and share via your own Pizap gallery.
Why not turn to Pizap after you've downloaded photos you took of a family outing? Kids will have fun adding goggly eyes or animal ears to that picture of Dad at the barbecue, and enjoy adding a quirky caption too. Pizap seems a great place for kids to play (with parent supervision of course - there are ads) with the bonus of a full free painting program so you can actually start from scratch. If you're a blogger who wants to edit images, Pizap makes a great alternative to slow-loading software.
Want more ideas about linking images with children's own writing? Try these posts at The Book Chook: Use FlauntR to Play with Images and Text, Keep Calm and Carry On, Quick Writing Online, Cow Appreciation Day and Fast and Fun Writing with Kids. Other image editors I like are Picnik and Befunky which I mention in Cartoonize Yourself.