Do u have GD lib?
Image functions
THIS IS FROM THE PHP MANUAL ....
Requirements
If you have the GD library (available at http://www.boutell.com/gd/) you will also be able to create and manipulate images.
The format of images you are able to manipulate depend on the version of GD you install, and any other libraries GD might need to access those image formats. Versions of GD older than gd-1.6 support GIF format images, and do not support PNG, where versions greater than gd-1.6 and less than gd-2.0.28 support PNG, not GIF. GIF support was re-enabled in gd-2.0.28.
Note: Since PHP 4.3 there is a bundled version of the GD lib. This bundled version has some additional features like alpha blending, and should be used in preference to the external library since its codebase is better maintained and more stable.
You may wish to enhance GD to handle more image formats.
Installation
To enable GD-support configure PHP --with-gd[=DIR], where DIR is the GD base install directory. To use the recommended bundled version of the GD library (which was first bundled in PHP 4.3.0), use the configure option --with-gd. GD library requires libpng and libjpeg to compile.
In Windows, you'll include the GD2 DLL php_gd2.dll as an extension in php.ini. The GD1 DLL php_gd.dll was removed in PHP 4.3.2. Also note that the preferred truecolor image functions, such as imagecreatetruecolor(), require GD2.
Note: To enable exif support in Windows, php_mbstring.dll must be loaded prior to php_exif.dll in php.ini.
To disable GD support in PHP 3 add --without-gd to your configure line.
Enhance the capabilities of GD to handle more image formats by specifying the --with-XXXX configure switch to your PHP configure line.