see what is set up on your server.
I use mogrify and it works like a charm, for eg. I upload an image (any size) and have the script upload to a directory and resize it for me - and the quality of the resize is perfect.
sample:
$updir = "../images";
copy($file, "$updir/$imagename");
if(file_exists("$updir/$imagename")){
// resize
system("mogrify -geometry 100x100! $updir/$imagename");
}
Obviously you could make one copy and resize for your thumbs and one keep as is to another directory.
A