What is Web 2.0? It's freeing computing from the shackles of individual computers. It's using the Internet to make both machines and people part of a community. We all benefit from that. One of the side effects of Web 2.0 is that a lot of the things people do with traditional software (write, edit, plan, calculate, and so on) gets put on to the Web. Usually there's a worthwhile trade-off: we lose the speed of a local app, but in return, we get access from anywhere and features that connect us to others.
Just putting an application online doesn't mean it will live up to the promise of Web 2.0, though--especially if the app that's put online was a miserable one to being with. Case in point, CanvasPaint, a reproduction of Microsoft Paint that runs completely in a browser. Microsoft Paint is a bad app. It's hard to use and inflexible (although there are definitely Microsoft Paint savants). So why put it on the Web? Because you can, I guess.
Hats off to CanvasPaint's creator, Christopher Clay. He wrote this as an experiment, and as such, it's a neat, if incomplete (since it's missing features) piece of work. But taking a bad app and porting it to a new platform, even if it's an amazing technical feat to do so, does not make it inherently useful.
There are plenty of interesting online graphics apps, by the way. See the drawing app LithaPaint [blog post], for example. For photo retouching, the latest service is Pixer.us (easy to use, but limited features). For graphics, though, I'm still a believer in actual software, and I frequently use the free Paint.net [download].