This library function is very useful for variable-sized images that only contain text, like this function that I use to output error messages that accumulate and cause a fatal error in my thumbnailer:

<?php
function errimg($error) {
   // $error is an array of error messages, each taking up one line
   // initialization
   $font_size = 2;
   $text_width = imagefontwidth($font_size);
   $text_height = imagefontheight($font_size);
   $width = 0;
   // the height of the image will be the number of items in $error
   $height = count($error);

   // this gets the length of the longest string, in characters to determine
   // the width of the output image
   for($x = 0; $x < count($error); $x++) {
      if(strlen($error[$x]) > $width) {
         $width = strlen($error[$x]);
      }
   }
   
   // next we turn the height and width into pixel values
   $width = $width * $text_width;
   $height = $height * $text_height;
   
   // create image with dimensions to fit text, plus two extra rows and
   // two extra columns for border
   $im = imagecreatetruecolor($width + ( 2 * $text_width ), 
                              $height + ( 2 * $text_height ) );
   if($im) {
      // image creation success
      $text_color = imagecolorallocate($im, 233, 14, 91);
      // this loop outputs the error message to the image
      for($x = 0; $x < count($error); $x++) {
         // imagestring(image, font, x, y, msg, color);
         imagestring($im, $font_size, $text_width, 
                     $text_height + $x * $text_height, $error[$x], 
                     $text_color);
      }
      // now, render your image using your favorite image* function 
      // (imagejpeg, for instance)
      out($im, array(), $error);
   } else {
      // image creation failed, so just dump the array along with extra error
      $error[] = "Is GD Installed?";
      die(var_dump($error));
   }
}
?>

The function expects an array of error messages to be passed in, and then outputs an image containing the contents of the array.  This is especially useful if your code is contained in an html page that will display rexes if the images do not render correctly.

This function displays the array in image form with index 0 at the top, and the highest index at the bottom.

You have to write out() yourself though, see imagejpeg, imagepng, etc for good ideas on how to write a decent output function.