Miro, does the GD extension show up in phpinfo();? If you are under Win98, I've found it a little hairy to get everything working together once I start tweaking things here and there; if you can, you might want to "start over" with a pre-compiled/pre-config'd Apache+PHP combo package that has GD working "off the shelf"... you can find one of those at php4win.de.
(funny, that's the 3rd time tonight I've passed that address on as an answer to a question... who knew PHP dev on Windows was so popular? <g>)
best,
Eric Mueller
http://www.themepark.com/php/