Blog reader Jenn posted a comment about a new possible replacement for Picnik. See her comments at iPiccy...Picnik Replacement.
The new candidate is PicMonkey at http://www.picmonkey.com/. From what Jenn is saying some Picnik alumni have gotten together to create a new and improved piece of graphic software. I can't wait to see it.
If you want to get in on the ground floor, go to the site and enter your email address for updates on their progress. I've already signed up because as you all know I struggle with graphics.