[Typo3] No thumbnails are created

[Dmitrii Dimandt]

Hello all. 

I have a very strange problem. Even though generation of thumbnails is
enabled in my Typo3.7.1, no thumbnails are vere generated or
displayed. Moreover, when I insert images in content elements (such as
text-with-image or tt_news) these images ignore settings for width and
height and are displayed with their original widths and heights, which
totally breakes the design, of course.

phpinfo shows support for GD enabled with GD version of 2.0.28.

Has anybody experienced similar problems. How could these problems be overcome?

Thank you