Deciding on an alternative for Photoshop depends a lot on what you use Photoshop for. There are five apps that I'll give you some information about that are trying to compete head-to-head with Photoshop. If you have more targeted image creation needs there are some apps that may even be a better option than Photoshop.
1. GIMP: A Great Photoshop Alternative and It's Open Source
Gimp has a strong user community that supports its product and a large feature set, though it has a different interface and way of doing things than Photoshop.
For those used to doing things in Photoshop, but who are interested in checking out this free software, look into Gimpshop. It's a modification of Gimp that is similar to Photoshop's user interface.
2. Pixelmator: Young Application Though Growing Strong
Wow, their website is beautiful. You shouldn't buy software based solely on its brand design, but let's face it, it sure does help. Pixelmator is a young application, but has a growing set of features. For example, in their 1.1 release version, code named kitten, they've just added tablet-based pressure sensitivity support. They have active forums, a downloadable manual for their product, and some juice moving them forward fast. Watch out for this app.
3. PhotoLine: Lots of Features but Lacks that Mac-Like Feel
Photoline is positioned as a Photoshop alternative. It is a commercial app with a large feature set. Its fast, powerful, and stable. But a few issues would make me hesitate before investing any time into the software: their website lacks that professional feel that makes you feel confident about the software your buying, their forums don't appear to be very active. Macapper does, however, give them high ratings and there is a Photoline Review there. Photoline has a few features where it may edge out Photoshop that are pointed out in this review, so it's worth a read.
4. Pixel Image Editor - Lone Developer Application
Pavel Kanzelsberger has been developing Pixel Image Editor in his spare time for the last eight years,
and as we know from the popular Textmate, sometimes these lone developer apps can be great. Pixel looks like it'll deliver the goods too. There is a wide range of tools, lots of layers, effects, and workspace options. I tried to follow a link to the Wiki and Forums and it went nowhere. So, no guarantee with community support on this one.
A. Acorn: A Lighter Image Editor
While Acorn is not a strong competitor to Photoshop, it may be a good solution for users that have light image editing needs and are on a budget.
B. Iris: Rated B as in Betaware
Iris is a single window editor. No option for floating palettes. While I often like that kind of interface, I would like more workspace options. This product has a ways to go before it will meet up to its listed launch price. Here is a link to a review over at CreativeBits that points out some nice features found in Iris.
Alternatives to Photoshop Based on Your Industry or Needs
There are some applications that are more refined for specific industries image needs, or may be for niche work within the industry. While Photoshop is generally seen as the leading tool for building website layouts, one major alternative for production-based work is Fireworks. About a year-and-a-half ago, Macromedia, the company behind Fireworks was acquired by Adobe, so it's hard to know what the future for this program is, but one hopes it'll continue on.
Another example of a good industry-specific tool is Cinepaint. This open source application focuses on prepping images for movies. Some top studios use it in their workflow.
Scaled-Back Alternatives to Photoshop
Another way to look at alternatives to Photoshop may not reside in full-blown apps. It takes time to launch Photoshop—after all it's a big app. It may be overkill for some needs. So there are a plethora of products out that cater to doing just a handful of actions really well and very fast. An example of an application like this is ImageWell. If you need to crop an image, adjust its quality, and then send it directly to Flickr, then this app was made for you.
Adobe Has a Scaled Back Version of Photoshop as Well
Photoshop Elements is a lighter version of Photoshop for the budget-conscious. If you only need to do simple image editing in Photoshop, then check it out.
If you can afford Photoshop, it will in most cases solve your needs. Though if you are on a budget, have a philosophical preference for open source, like trying out new software, or you have refined image-building or editing needs then there are some alternatives out there to Photoshop.
Anyone in the community that has experience with these applications, or alternatively, applications in other operating systems, let us know in the comments. We'd like to gather more resources for Photoshop alternatives for the Psdtuts+ community. A lot of the programs listed in this article are available for multiple operating systems. Let us know your experiences with alternative image editing applications in different operating systems as well.