GIMP is definitely essential. I use it myself, however the new release is pretty slow and harder to use in simple file updating. I recommend an older version, or if you're like me and you like to code on the go (GIMP installs DLL files so requires a custom build for this...) you can stick this version on your flash drive.
http://portableapps.com/apps/graphics_pictures/gimp_portable
A portable version of a great stable release of GIMP which runs quick from a USB.
fuzzy select + color to alpha + .png files = great sprite tool