Avatar Plugin

I've read the instructions a zillion times. Please help me decipher the following error:

Fatal error: Call to undefined function ImageCreateFrompng() in public_html/wp-content/mu-plugins/avatars.php on line 883

This happens after the picture is uploaded and is prepared to be cropped.

The picture isn't loaded and the default avatar hasn't changed. BTW: The default avatar is a gravatar.

Latest builds for BP and WPMU (2.8.3)
Best regards,
MB