Is there any free tool available for creating and editing PNG Images?
The GIMP (GNU Image Manipulation Program). It's free, open source and runs on Windows and Linux (and maybe Mac?).
Paint.NET will create and edit PNGs with gusto. It's an excellent program in many respects. It's free as in beer and speech.
ImageMagick and GD can handle PNGs too; heck, you could even do stuff with nothing but gdk-pixbuf. Are you looking for a graphical editor, or scriptable/embeddable libraries?
Inkscape is a vector drawing program that exports PNG images. So, you end up editing SVG documents and exporting them to PNGs. Inkscape is good if you're starting from scratch, but wouldn't be ideal if you just want to edit existing PNGs.
Note--Inkscape is open source and available for free on multiple platforms.
If you're looking for free software with the look-and-feel of Photoshop, try GIMPshop.