While jQuery supports a lot of effects, most of these are pretty useful when dealing with image galleries rather than stand-alone images. One plugin that however caught my attention is imJQMosaic. This plugin creates mosaic pattern using an image.
Phototype is a client/server-side library, based on prototype, which supports all kinds of image manipulations. On the serverside the library is powered by combination of PHP/GD that renders the image. With phototype, you are able to rotate, resize, flip and do some other cool effects to images