Please know that (1) I am not a graphics designer, and (2) I've never actually tried photoshop for a serious project. That being said, there are many people who are skilled in graphics design and photo manipulation that could write a far better review that I'm about to give, and I agree with them 100%. However, I'm still going to attempt to voice my opinion from the viewpoint of someone who just wants a freeware that can manipulate photos, not one that can compete with a $$$$$$$$$ commercial product.
So on with the show! The first thing you notice about the GIMP is that it requires GTK, which means that it has that "Linux type look" on Windows (and Linux as well). Some people aren't used to that, and it might scare them away, but it is very nice if you can deal with a little GNOME-ish appearance.
Next, the GIMP can handle a ton of different filetypes. It has its own, XCF, but it can also handle pretty much any image file you can image, from Photoshop files down to a gzip archive. It has tons of different tools, many mimicking Photoshop, and you can download things like fonts, brushes, and other little gadgets to further personalize your editing skills. It has a ton of filters which are being updated with each release, and it supports layers (obviously).
There are a few things wrong with the GIMP though. First is the startup time. It takes about a minute to start on my EEE PC, even more if you have a ton of fonts and brushes and such. Also, it's actually fairly buggy, and has crashed on me several times in the middle of work. That's not to say that it crashes every time, just several times. And any computer person knows, a program crashing before you've been able to save is never a happy thing.
The last thing I have to criticize GIMP for is the lack of user friendability. (Is that a word? Well, it is now.) Out of all of the freeware programs I've come across, the GIMP scared me the most when I first opened it. I mean, before GIMP, I used MS Paint, and jumping between those two is like going straight from crawling to running a marathon. It doesn't make it any easier that the "Help" file is not included in the download. However, there is plenty of support available on the GIMP Talk forums, and even books about GIMP (which are far more interesting than you'd think, in my experience).
Right now, it might seem like GIMP is a mediocre program since I've spent about half the time talking about it's flaws. But that's not the case. GIMP is an amazing program, but it's extremely complex. It's not as easy as just saying "Well, it has a nice blur filter," because GIMP really doesn't have one use. Heck, it doesn't have an intended use, really. GIMP is the most unbounded freeware utility you will find this side of Linux. The possibilities are endless.
Not only is GIMP 95% of everything you want in a (freeware) image editor, it's also cross platform, portable, and open source.
This is probably the worst review I've done (which is saying something), but I figured that if I put out a crappy review, someone smarter than me would offer to write their own and let me post it (giving them credit, of course). The way I see different users using GIMP is like this: if you don't know that much about GIMP, then this review might help turn you on to a great utility that you can begin to learn how to use. If you do know a ton about GIMP and think this review is oversimplified, then you're smarter than me, what are you doing here expecting profound image editing advice? I am no guru.
PS - If I get so much as one comment saying how much better Photoshop is than GIMP, my head is going to explode. Look at the title of this blog. This is "FreewareWire," not "$700CommercialSoftwareWire".