The present work is aimed at understanding and explaining some of the aspects of visual signal processing at the retinal level while exploiting the same towards the development of some simple techniques in the domain of digital image processing. Classical studies on retinal physiology revealed the nature of contrast sensitivity of the receptive field of bipolar or ganglion cells, which lie in the outer and inner plexiform layers of the retina. To explain these observations, a difference of Gaussian (DOG) filter was suggested, which was subsequently modified to a Laplacian of Gaussian (LOG) filter for computational ease in handling two-dimensional retinal inputs. Till date almost all image processing algorithms, used in various branches of science and engineering had followed LOG or one of its variants. Recent observations in retinal physiology however, indicate that the retinal ganglion cells receive input from a larger area than the classical receptive fields. We have proposed an isotropic model for the non-classical receptive field of the retinal ganglion cells, corroborated from these recent observations, by introducing higher order derivatives of Gaussian expressed as linear combination of Gaussians only. In digital image processing, this provides a new mechanism of edge detection on one hand and image half-toning on the other. It has also been found that living systems may sometimes prefer to "perceive" the external scenario by adding noise to the received signals in the pre-processing level for arriving at better information on light and shade in the edge map. The proposed model also provides explanation to many brightness-contrast illusions hitherto unexplained not only by the classical isotropic model but also by some other Gestalt and Constructivist models or by non-isotropic multi-scale models. The proposed model is easy to implement both in the analog and digital domain. A scheme for implementation in the analog domain generates a new silicon retina model implemented on a hardware development platform.