Photoshop is clearly the best option for this sort of thing, but it is expensive. You may also wish to try Photoshop Element IV, which is about $100 and is a VERY powerful package - it is both a subset of Photoshop itself and a "proving ground" of sorts for new Photoshop features. Most new Photoshop features tend to show up in Elements the release before. If they are successful there, they migrate into Photoshop itself. This is not true for all features of course, but I have seen a few follow this path.
If Elements (at $100) is too expensive, try GIMP. It is open source freeware, but you will have to install Apple's X11 to use it. You will find Apple X11 on your install disks. GIMP is very powerful as well, in the neighborhood of Elements. The only downside is that the documentation tends to be limited, and you can't just wander into your nearest Barnes and Noble and pick up a good book on GIMP.