Uploading larger resolution photos to MSN Groups is fairly easy -select the "Don't resize" option when you do the upload. Of course, these larger resolution photos will quicky burn through the 3 mb of free photo space, but then again, you can do like Wizard and pay only $19.95/year to get more storage space. I think that also allows you multiple uploads rather than one photo at a time.
As far as downloading, I don't know, but it seems that if the pic was uploaded at the higher resolution it could be downloaded at the same high resolution.
I've never tried GIMP, but I hear it has a lot of bugs. I got Adobe Photoshop Elements free as part of a scanner package. There's also a shareware program called Graphic Converter, but it's more for saving graphic files to a wide variety of formats, i.e. .jpeg, .bmp, .pict, etc.