Google now integrated "Picnik rich editing tools in to Picasa Web Albums, allowing you to experience them without ever having to leave your account. After clicking on the "Edit" button, Picasa Web Albums uploads the photo to Picnik and opens Picnik in a pop-up box.
Then, Picnik away by applying an effect, adding a sticker, or exploring your own creative path with advanced tools. When you're done editing your photo, save back to your album by either replacing the existing image or making a new copy," explains Google.
Picnik is still a Flash application and it doesn't load quickly, so you've to wait at least 10 seconds until you can use it. There's an useful "auto-fix" option similar to "I'm feeling lucky" from Picasa, you can crop photos, repair red-eye flaws, remove color casts automatically and fix exposure.