ImageTransform messing up pictures

I am trying to use ImageTransform to create thumbnails for a gallery
that I am building.  I am using the GD driver (PHP has gd installed with
it).  But when I resize the image, the resulting image's color is
destroyed.  It seems to turn it into black and white.  I have followed
the examples that was included with the GD driver, but can't seem to
figure out what I am doing wrong.  Here is my code.  ($art is a
dataobject that stores the filename in a mysql table).  Is there a
setting that I need to set?  Or should I use a different driver? (this
occurs on my test and production server).  The filetypes are jpg.

$thumbnail = Image_Transform::factory('GD');
$thumbnail->load(BASEDIR.$art->picture);
$thumbnail->keepSettingsOnSave(true);
$thumbnail->scaleMaxlength('150');
$path = pathinfo($art->picture);
$thumbnail_file = '/images/gallery/thumbnails/'.$path['basename'];
$thumbnail->save(BASEDIR.$thumbnail_file,'',200);
$art->thumbnail = $thumbnail_file;


Trevan