how do you store your photos?

Just one of the wonderful things about the blogging world is that you can get instant and honest opinions from a huge number of people on just about any subject.  In the past I have asked your opinion on paint colour for shutters, and window treatment in our guest cottage but today, dear friends, I am asking you to apply your technical mind !!  OK,  not too technical, because I wouldn't understand a word of it, but I'd like to know what solutions you use for storing all your photos.

At present I am using Picasa, but I have a couple of issues with them, including the unreasonable amount of space they require on my computer and rumours of google accessing my database via my photos.  Urban legends maybe, but whatever, I think I am ready for a change.

I want a system that allows me to download my photos from my camera, or possibly from the internet;  I want to be able to crop, enhance etc, make a few buttons, play around with fonts.  I like to store an original of each shot, and to file the reworked version by theme.

I'm looking at Adobe Elements, but I'm not sure if the basic version is interesting enough, and of course I don't want to spend megabucks on the professional one.

So what would you advise me to use?  What do you use? Are you happy with your system.  Thank you so much for taking a moment to help me on this one. 

Gibson asked me to tell you that he'll give his favourite sock to whoever leaves  the best suggestion - and I bet you don't get an offer like that everyday!!