"Is this true?"
To a degree. It is a fair bit of work, and if you do it on the fly you are just wasting resources, because the outcome will be the same every time.
"What would be the best/easiest way to generate thumbnails"
There are special image viewing utilities like ACDSee that can generate thumbnails in batch-mode, just point to a directory and away you go.
As for add new images, you can create a PHP script that generates the thumbnail semi-on-the-fly so that it is created once and written to disk with all the others.