Image upload not working properly

When trying to create a new image (icon for map), I get the following error when trying to display the image (i.e. it uploads ok, but does not display properly):

(main text of the image, html not included)
imagecreatefromstring() :Data is not in a recognized format [image.php:58]
imagepng(): supplied argument is not a valid Image resource [/include/config.inc.php:1683]
imagedestroy(): supplied argument is not a valid Image resource [/include/config.inc.php:1683]

To reproduce:
Go to general, images. Click on one of the icons to display, right click, save as.
Go back, click create new image, give it a name, and upload the png file you just downloaded. Should see these errors, at least with a postgres backend.