I just discovered www.pictreat.com, which will retouch your photos for free. I've been uploading pictures like crazy!
Check out the results:
Original
Retouched
It doesn't do a super-extensive job; it gets rid of red-eye and evens out your skin tone. It also re-sizes your picture. If you want more intricate retouching, check out www.picwash.com. That site cost $7, tho.
I tried it and was totally let down. I guess after having my photos re-touched by Edson, Ryan and Ama I'm spoiled.... but it just didn't seem to do any better then my iphoto can do.