Path::Class does it all, and does it well.

use Path::Class;

my $file = './hello.txt';
my $path = Path::Class::File->new($file)->absolute;

print "the file ", $path->basename",
    "is in the ", $path->dir, "directory\n";

# or if dealing with file specifications of a different platform...
$file = "c:\\Documents and Settings\\you\\..\\me\\hello.txt";
$path = Path::Class::File->new_foreign('Win32', $file)->absolute;
[download]

It really is the only module you need when dealing with this sort of stuff. No special cases to remember, it just works as it should.

There is also a procedural interface if using objects isn't your thing.