An interview with Rick Brewster, one of the authors of Paint.NET, available here.
I nominated myself to the project manager position and the four of us (Brandon Ortiz, Chris Trevino, Luke Walker, and myself) kicked out a v1.0 product in about 15 weeks. We didn't start with the source code to Paint, but instead built Paint.NET from scratch -- I was quite impressed with how easy it was to build an application in C# and to keep it organized.
The primary goal of Paint.NET is ease of use. One rule of ease of use is recognizing that "people don't." They don't follow or even read directions (I certainly don't), they don't read dialog boxes (I hate dialog boxes), they don't backup their files, etc. And many people aren't interested in figuring out all sorts of complex or technical things. They just want it to work.
I don't believe that we should be aiming to replace Photoshop or The GIMP.
The rest of the interview is great, I recommend reading it.