Avatars plugin upload gives fatal error

WordPressMU v 2.7.1
all files are in the correct directories. .htaccess file has been overwritten with it's new line (file attached)
When users attempt to upload a graphic for an avatar they get this error:

Fatal error: Call to undefined function: imagecreatefromjpeg() in /Library/WebServer/Documents/wp-content/mu-plugins/avatars.php on line 566