I’d like to draw up an electrical schematic for a system I cobbled together. I’ve got various prebuilt components I didn’t design or build, such as an Arduino and other things. I’d like to paste them in as images, and just draw the wires coming out of the relevant pins, but I don’t know of a good program to do that. (Microsoft word’s image drawing tools leave a lot to be desired)
Digi-Key has a free online schematic drawing app called SchemeIt at http://www.digikey.com/schemeit#
For the Arduino, you could just place a rectangle, and give it a text label. The app even assigns part numbers as you go (eg: R1, R2, C1, C2, etc.) so keep that in mind if you care about which particular part gets what label, but it’s not hard to right-click things and rename them either.
To add text labels, the Text item is cleverly hidden in the Basic Shapes menu.
Man, I could have used this app when I was in college! But then again, IBM PC XTs were still popular and the Internet wasn’t even a dream yet. 
I have found this product
usefull stepping through Arduino stuff found here
There are PCB, breadboard and schematic layouts plus a programming interface.
Download Qucs. You can create schematics and run SPICE-like simulations. And it’s free.
If you are only interested on the schematic, then use Fritzing. It can produce nice looking, colorful schematics.
If you want to simulate the circuit then Ltspice is probably the best free SPICE simulator out there.