If you read the verbiage in that file carefully, which I did not, it says:
Specifies the image toolkit used to create thumbnails from uploaded images. # By default, the ImageMagick library and Image::Magick Perl module are used; # if your system does not have these, you can use the NetPBM tools instead # (assuming that your system has these tools installed). Possible values for # this setting are "ImageMagick" or "NetPBM". # # ImageDriver NetPBM
This means it must have the Image::Magick Perl module installed also. I never would have caught this if I hadn't read this thread which refers to it.
"....Solution: You need to install the ImageMagick-perl rpm. I installed this, yelled, "Thumbnail options, show thyself!" and I had instant gratification! As I'm using apt-rpm, all I had to do was type: apt-get install perl-ImageMagick..."
Once installed by my kindly system administrator, thumbnails worked fine again.