What they say on the PHP.net page is:
that your PHP-version must have the GD library included in it's compilation. If not you have to compile PHP with GD yoursefl!
How most thumbnail scripts work:
you have to include them as an image in your page:
<IMG SRC="thumbnail.php?picture=test.jpg">
another thing is that most GD library's do not include support for GIF because of it's patent by CompuServer in the US.
At least the version which came with Debian and the version which you can install under Mac OS X.
So if you get an error: Call to undifined Function. You can try to change the word GIF to PNG or JPEG.. PNG is compiled in most of the GD-Library's JPEG is in every GD Library from version 1.8.3 you can check if GD is compiled with your PHP version, by making a file with the following content:
<?php
phpinfo();
?>
You can also see if you have support for the formats!
Gr.
Kasper