Oekaki is just like MS paint, but with layers, and the ability to do watercolor. The other neat thing is that it's only a small applet and it allows people to post their finished art to a message board just for drawing.
Another free software solution for artists is OpenCanvas. It allows you to paint with your tablet, layers included as well as some layer settings. And the cool thing is that the program is a self-executable and is only 1 MB in size, but does so much beyond what I can describe here.