If you are using PHP 5.3.x or higher then delete phpthumb and rename this folder to phpthumb.


Reason for this.
-------------------
The original phpThumb version is using the ereg function a lot. The ereg function has been 
deprecated as of PHP version 5.3.0. All ereg functions are replaced by preg_match.


!!!! DO NOT RENAME THE FOLDER IF YOU ARE USING PHP 4 !!!!