NGGallery thumbnail problem

I recently upgraded to the most recent version of NGGallery (1.2.1) and it now no longer automatically creates thumbnails. I can manually create them via the “Edit Thumbnail” option but when I either import a directory of images or select that all in the Manage Gallery screen and select the “Create New Thumbnails” option it does not create any thumbnails.

Prior to this upgrade I was able to create thumbnails with no issue.

Anyone have any idea what is causing this issue?

NGGallery reports no error and there is no error in my error logs on the server

Server stats

Operating System : Linux
Server : Apache
Memory usage : 14.04 MByte
MYSQL Version : 5.0.51a-community
SQL Mode : Not set
PHP Version : 5.2.6
PHP Safe Mode : Off
PHP Allow URL fopen : On
PHP Memory Limit : 32M
PHP Max Upload Size : 100M
PHP Max Post Size : 8M
PHP Max Script Execute Time : 30s
PHP Exif support : Yes ( V1.4 )
PHP IPTC support : Yes
PHP XML support : Yes