Image manipulation not working on localhost

[eluser]Unknown[/eluser]
Hello guys,
I am new to CI, but I've used couple of other frameworks (Zend,CakePHP and couple of custom built ones). So far I like it - it's lighter than Zend, and faster than Cake. But I have problem with the image manipulation class. It is not working on my local machine.I use the documentation saying:

Code:

$config['image_library'] = 'gd2';
$config['source_image'] = '/upload/test.php';
$config['create_thumb'] = TRUE;
$config['maintain_ratio'] = TRUE;
$config['width'] = 75;
$config['height'] = 50;

$this->load->library('image_lib', $config);

$this->image_lib->resize();

if ( ! $this->image_lib->resize())
{
    echo $this->image_lib->display_errors();
}

I have GD/GD2 installed, and the whole process is going good, no errors, and I receive response "true" when I do "echo $this->image_lib->resize();", but no manipulation was done, neither a file was created. I don't know if I am missing something here ...

I tried to use $config['new_image'] = '/upload/testNEW.php'; and $config['create_thumb'] = FALSE; so I can get at least a duplicate file, but it didn't work too. I used the upload class - and it's working fine for me ...

Is there a way to trace why it is not creating the image?

Thanks.