At the meetup on Wednesday, one of the discussion topics we touched on was the ImageCache module. It's the 8th most popular Drupal 6 module, and it is part of Drupal 7 core. It's what allows you to have users uploading images in whatever size they want, but then displaying them on your website in a size that's appropriate for the website (for example, a thumbnail size within a block, a small size within a teaser, and a large size within a full page view), without needing your content editors uploading each possible size that's wanted.
But the ImageCache module alone doesn't give you very many image manipulation effects to choose from. You can scale, crop, rotate, and desaturate, but that's about it. We started talking about it being cool to be able to do other neat things with images, like applying a watermark, rounding corners, etc., but we didn't know which module out there already lets you do that. Anyway, that module is ImageCache Actions. Check it out: it's really cool. Sadly, there's no Drupal 7 version of it yet, but it will surely happen, whenever the maintainer or other developers from the community step up to work on it. Organizational funding for the maintainer or other developers can help accelerate that, so if you know of a potential sponsor, please let them know to make their wishes known.