I checked it out already, and there is not one solid solution unless you have to rig it to a point where the plugin becomes inefficient.
How do you explain thumbs that were created no problems before the upgrade?
Also, how do you explain where numerous people are having the same issue?
It is not the memory issue because with 2.6.5 and pre 2.7 version of ngg gallery worked fine with the current set up.
Dan