A lot depends on how much post processing you think you need or want to do and how much you're prepared to spend.
If you just need to add a few tweaks to tidy your images up there are several free pieces of software around. If you want to isolate the subject from the background and superimpose a new background then you need to go for something a lot more sophisticated - and expensive.
At one end of the spectrum you can download free software that will usually correct red-eye and allow a certain amount of contrast and focus/sharpness correction. At the other end of the spectrum you have something like Adobe Photoshop that will do more than your wildest dreams.
An excellent interim choice is something like Adobe Photoshop Elements. Amazon currently have v.9 for £57.58, v.8 for £63.99 and v.7 for £17.87.
The added bonus is that if you go for either of these they are featured in great magazines such as Digital Photo which includes good 'how to' articles and movies on the included DVD where they take you through various projects.
I'm sure that there are many other fine products out there . . . . . it's just that I've never used them as I'm an Adobe-man through and through.
Agree with all the above, I used to use photoshop but a professional photographer friend introduced me to adobe lightroom and having tried it on a free trial I must say I'm hooked. It seems far simpler to use and a quicker method to process large amounts of images, it is quite expensive though but if you know someone at uni or college the student copy is around £70!
I'm interested in what you say about Lightroom. I had a look at it and couldn't work out what it was for. I keep seeing references to 'workflow' (and Adobe's words are very flowery ;-) )but I'm not sure what benefits it provides over other packages?
workflow just refers to the processes you're going through and the order you do them. for a quick example: trim, resize, adjust levels, adjust colour, done. There's a really good guide on this web site under air show kit and photography - digital darkroom, i think. Personally I found lightroom just easier to use, having all the elements of my workflow to hand and therefore making it a lot faster. I dont tend to do much apart from touch up and fine tune my images so if you want to import backgrounds and do all kinds of fancy what-not i couldnt say how it would compare. another advantage is that it recognizes ARW which is sony's version of RAW which some packages dont. best thing to do is play with as many as possible and see what you get on with best, still waiting for my lightroom to arrive so will let you know how i get on.