I am busy rolling my own web based gallery system with on the fly thumbnail generation and photo categorization.

I just got done doing the exact same thing on my gallery website. I wrote a few php pages to manage images that were FTP'd up to the server. Basically, the script checks for any changes in the file listing in it's directory, then if there are changes (picture added, picture deleted) it will generate the appropriate thumbnails (using Imagemagick's convert) and screen-sized images, and write out the whole deal to an XML file that keeps track of the directory. I included a quick authentication piece so I can login and move/edit/delete photos right on the webpage. If anyone wants the source, let me know and I'll post it here, it's not bulletproof yet, but it may be useful.