If the image size for a product is smaller than the configured thumbnail size the thumbnail file does not created created and no image is displayed.
Tracked this down to
generateThumbnail($file_path) in
image.php returning true when it should return false.
A quick fix is to change line 174. From:
Code:
if (isset ($gd["GD Version"])) {
$ok = true;
$gd_ok = true;
...
to:
From:
Code:
if (isset ($gd["GD Version"])) {
$ok = false; // Change this line
$gd_ok = true;
...