I use JASC Photoshop 7 for all photo editing jobs, it allows 1 button resizing to reduce to the 50k limit, the photo above was originally ~300k. Picture It also is reccommended by folks whose opinion I respect. I also have Adobe Photoshop 5 which allows a 2 step pixal reduction (both pixals and size are independanly done) but have found it cumbersome and difficult to get a good copy, it also likes its own .psd file format(rather than .jpg which is the best format to use). This can be a pain. Try to stay away from .gif as it is more limited in its color depth, often leaving a surreal and or grainey effect to the pic.
You are also going to be limited by the quality of your scanner. I have found it difficult to get good quality and large sizes from scanned images. I use a 5yr HP which is a dinosaur compared to newer ones so maybe thats the problem.
Best images come from a digital camera all of mine are either from a Nikon 950 !$750 or a Canon S100 ~$420. I really like the Canon, its small size mean that I have it with me much more often.
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