There's a very good one that's live now: JumpCut. With this tool, once your videos are uploaded, you can splice them together, overlay audio tracks, and add effects similar to the ones you'd find in a traditional software-based editor. Since all the editing happens online, you suffer through the slow upload only once.
You can also re-edit other people's videos, which is fun and may be a big hit with music tracks. I can see artists and labels posting their own video resources online and letting fans make their own music videos. There's a danger when you open up material like this (see the GM ad contest fiasco), but it could give a big boost to artist/fan relationships.
I first saw this product when the CEO demonstrated it, and I was blown away by its capabilities. In trying to use it, though, I ran into some frustrations. No matter how good the tool, editing videos is hard from both a technical and a creative perspective, so you'll need to put some time into it before you can churn out acceptable results.
There's another good online video editor in development, MotionBox [via TechCrunch]. Also, interesting photo-editing tools are coming online. Try Pixoh and Pxn8. These let you do with your online photos what you're probably doing right now offline, in Picasa or a similar app.