This is from the book Professional PHP Programming by Wrox Press copyright 1999
"Though PHP3 uses the GD library for most of its image functionality, it has not been updated to support the PNG (Portable Network Graphics) format. It only has support for the earlier GIF format. Since version 1.6, GD discontinued support for GIF due to copyright issues; we must either use the older versions of library or wait until PHP supports the PNG format. Unfornately, even up to the Beta 3 release of PHP 4, PNG support is still missing."
As you know PHP 4 is out right now, you should go to www.php.net to find your answer there.