At the Max 2007 developer conference Adobe product manager Geoff Baum gave a demo of Photoshop Express, the Flash-based image editor that runs inside a Web browser
http://www.news.com/Adobe-flashes-more-looks-at-online-Photoshop-Express/8301-10784_3-9790168-7.html?part=dht
This press-release says that PhotoshopExpress will targeted to low-end market to compete with free desktop photo editors. This product has the following functionality:
This press-release http://www.news.com/Adobe-to-take-Photoshop-online/2100-7345_3-6163015.html says that the product will be free, Adobe is going to monetize it using online advertising.