I'm a bit late on this but I figure I will jump on the Adobe Photoshop Express Online edition band wagon as well.
The entire site is a flash based application (probably written using Flex 3). It looks like they spent a bit of time with the user experience folks as the signup process as well as the overall usability of the site is smooth and intuitive.
Photo EditingThe photo editing features were highlighted at the Adobe Max conference and I see that the functionality has not changed that much from the demonstration, probably a bit better. Overall the editing features are really fast and the mulitple examples for each effect provide some really good feedback. You can also apply several different effects at the same time, each time you select an effect like color saturation or soft focus the effect is applied accumulatively you can at each step reverse your decision and when you are finally happy with what you have you can commit your changes.
Saving the changes did take a little longer than expected but I did apply several different changes to the image. I uploaded one of my favorite pictures I took while on my honeymoon in Tuscany, did a little touch up to the color saturation and sharpness and voila. I didn't find a way yet to specify how large the image should be on the embed other than manually adjusting the height and width in the URL but figured that the embed image is a smaller copy of the original.
2 Gigs StorageWhile most hobby photographers would scoff at 2 gigs of storage space it is still in Beta, and I think that if it catches on Adobe will provide more space...for a cost of course.
I think Adobe Photoshop Express online is a great first step and look forward to seeing how it improves (like buzzword) with each future release.
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