10/4/2007 UDPATE: Added video below.
CNET News.com has posted a three minute video of Photoshop Express being demo'd at the Max 2007 conference in Chicago.
What they showed looks promising. It integrates Flash heavily into the web based product. Here are some of the topics covered in the video: cropping, picture rotation, white balance, scar removal, and the ability to jump to a specific change in the history.