I use three tools for scanlation.

Paint.Net

Paint.Net is a freeware graphic editor. It is very lightweight and has almost all basic functions as a graphic editor. As with all freeware graphic editors, it lacks many advanced functions.
I use Paint.Net when I am translating pages. Since I translate as I erase text bubbles, I favor Paint.Net's ease of use.

Adobe Photoshop CS3

After I scan books, I use Adobe Photoshop CS3 to resize and clean up scanned images. Then I chop them up into pages in Photoshop.
I also use Photoshop when I have to overlay text. Since Paint.net lacks this function, I am forced to use Photoshop for this purpose.
I have no plan to shell out 200 bucks to upgrade to CS4 yet.

Dell 948 All-In-One inkjet

I use Dell 948 All-In-One machine to scan manga & manhwa books. I use this machine mostly for scanning. I barely use it for printing. In fact, I think I've used its printing function only once which was a test page (doh).