I am using the most current bundled with cPanel. GD 2.0.34 and free type 2.1.9
It resizes fine, but does not keep transparency. I was under the opinion that was a shortcoming of GD that had not been rectified, and the only to keep transparency when resizing pngs was with imagemagik.
As for upsizing, if the image were already small, I would just want it placed on the page normally, which would depend on the container it was in. So, if not floated or anything, I would expect it to be in the upper left of its containing block.
Does that make sense?