this is a problem with the memory limit on the server. resizing the images takes quite a bit of memory from the server to accomplish.
Most likely, if you turned on error reporting, you would see an error about the server memory limit being exceeded.
you may be able to increase the memory available to PHP scripts by adding the following code at line 1:
<?php
ini_set("memory_limit", "256M")
?>
however, the host may have this setting locked down so it cannot be changed.