I Love Me Some Skitch!
I'm a late adopter, it's true. I have a cell phone from earlier this century, I only just upgraded to Leopard in the last 3 months, and I'm just now discovering the usefulness of Skitch. It rocks!
Everyone knows about the web posting functionality, but for me I find drag & drop to be the most useful feature – especially when paired with the Blogging Bundle in TextMate. If you don't have it installed, grab it with the GetBundles bundle (Al3x has a good write-up on this):
Once you're set up to post to your blog, you can easily drop in an annotated screen capture:
If you're not already blogging with TextMate, go do it now (if you're using Expression Engine, we've got you covered). If you're not using Skitch to quickly embed images, you should give it a shot.