I also have this problem. When I upload the picture, it can't generate the thumbnail.
Besides, If I upload a big picture (~ size 4M, my php.ini setting can upload 128M size, my server is using GD library), the upload process will be failed. In additional, the upload picture function is not reliable. I have tried to upload a few pictures after I have installed this shopping cart, there is no response when I click "Add" images button. It doesn't popup a browse window for me to choose the photos from my computer. But after a few minutes, it can popup the browse window again.
I just think that the relibility of this shopping cart should be improved. Besides, I also mention that if I access the admin. backend panel with remote server, the speed is quite slow for running the java script based backend.