Same problem here. Not resizing. But I know its not a wordpress configuration problem, not a permission problem, it’s a server problem.
Just installed vps server, cpanel on centos 5.6. Installed php 5.3 with php-gd and all, also gave file permition 755 to the upload folder, but even like that I cant seem to be able to resize images during upload… what else do you guys have to pitch me?