I got the same problem, my server settings are..
Operating System : Linux
Server : Apache/1.3.37 (Unix) PHP/5.2.0
Memory usage : N/A
MYSQL Version : 5.0.27-log
SQL Mode : Not set
PHP Version : 5.2.0
PHP Safe Mode : Off
PHP Allow URL fopen : On
PHP Memory Limit : N/A
PHP Max Upload Size : 8M
PHP Max Post Size : 12M
PHP Max Script Execute Time : 240s
PHP Exif support : No
PHP IPTC support : Yes
PHP XML support : Yes
GD support
GD Version : bundled (2.0.28 compatible)
FreeType Support : Yes
FreeType Linkage : with freetype
T1Lib Support : No
GIF Read Support : Yes
GIF Create Support : Yes
JPG Support : Yes
PNG Support : Yes
WBMP Support : Yes
XPM Support : No
XBM Support : Yes
JIS-mapped Japanese Font Support : No