Thumbnails as topics uploaded

I want to somehow use thumbnails created from uploading an image via wordpress upload and create thumbnail.
Afterwords use something like this code to pull in the image
$values = get_post_custom_values("Image");
To be used as it’s topic image.

Right now I am having to create the image in PS and upload it to a dir which makes it feel more like editing an html page instead of the wonderful WordPress post and uploading tool.