Newer versions of PHP is bundled with PHP, you just need to change your php.ini file.
Scroll down in php.ini document and remove
the semicolon from the line:
;extension=php_gd.dll
or
;extension=php_gd2.dll
(depends on which version of GD you have)
After that you must restart the server.
If not you have the GD, download it for free here:
http://www.boutell.com/gd/
It's been a while since I've done this, just read the instructions, it should be fairly easy.
regards,
Thomas A