Photoshop 7 is an older version of Photoshop but is still plenty powerful enough. You can do almost any of the effects you can do in the newer versions of Photoshop (Like CS4), but the creation of these effect are slightly more difficult.
Photoshop contains an endless selection of drawing tools, filters, color adjustment capabilities, and other tools designed to manipulate images in almost any way. However the free version is limited on this options.
Photoshop 7.0 comes with standard picture and photo editing software. It includes the ability to remove "red eye" from pictures, and other basic editing functions.