Pixen

Pixen is like Photoshop for pixel artists. It is clearly designed by people who know the needs of those working with sprites, icons and such. The tiny format of graphics demands a certain precision, and Pixen delivers that precision on tiny-format artwork. Intelligent palette management, custom backgrounds, tiled view, and my favorite: alignment crosshair. The crosshairs draw temporary guidelines to a specific pixel. It's free and open-source, so grab a copy and start modding all those NGage games you've got lying around... And it is designed for game design, as you can see from most of the screenshots. In fact, this is the perfect complement to Coldstone, where creating graphics is 99% of the chore fun.