This could be a memory issue on your server.
The best way to resolve it would be to ask your hosting provider to increase the memory limit.
However, you can try doing it manually by adding the following line to the top of the PG_CachedResize_Image.php file:
ini_set('memory_limit', '64M');
If that does not work try going up to 100M.
Let me know if you still have the issue.