SpeakingImage

I am a big fan of fotobabble because of the ability to "talk" about pictures.  SpeakingImage is similar but it is more about annotating images then talking about them.  With each image you can color over parts with free hand or pre-made shapes.  You can draw lines and bookmark specific sections of the image.  You can also insert a text blocks for the bookmarks that you create.  For more information on each part of the software, there are several videos you can watch to learn more.

You could use Paint or some other software, but with SpeakingImage you have the ability to collaborate on an image on the web and discuss the various parts of the image.  You can create groups and wikis to discuss an image.  I could really see this being used in science classrooms and geography classrooms.  You could also use it in a history classroom.  You can see the sample below for the JFK assassination and see all that you can do with this software.