Welcome to the 12th of 31 applications we will post (in addition to the contest participants' submissions). Make sure you add this blog to your RSS / Atom feed and check the gallery for summaries of all the apps as they are released.

The Atalasoft Screen Cutter sits in your system tray waiting to spring to life. When you double-click it, it will put a gray transparency over your screen. Now just freehand draw a region, and when you let go of the mouse, the area you selected will be put as a PNG into your clipboard, ready for you to paste into an e-mail, IM or wherever.
You can access settings by right-clicking the icon. Choose the shape you'd like to cut and the format to put onto the clipboard.
Copy the shortcut into your Startup folder to have Atalasoft Screen Cut start-up automatically.
Update: A bug was fixed that made the cutter grab the screen before the overlay was hidden on some systems.
Download the application
Download the source
About Atalasoft's 31 Apps in 31 Days