MS-Paint does pixels, but not real well.
I use a program called Graphic Workshop that is shareware, it's available at http://www.mindworkshop.com/alchemy/gwspro.html
It's more for image conversions and manipulation that editing, but it helps interface with Paint and it does a great job of resizing and dithering large images.
Good lord, Jinx, that thing is HUGE! I'd be here all night, if I had a phone line dedicated just for me!
I'll have to try it tomorrow, after all the kids are gone for sure.