In order to generate thumbnails as well as create derivative images in Omeka, you'll need to set the path to ImageMagic in the Omeka settings. ImageMagick is already installed on all of our servers at Rockaway Hosting and you'll set the path to it under Settings > General near the bottom of the page.
The path to put there is: /usr/bin
After setting the path and testing it click the Save button to store the path.
Note: If you have already uploaded images setting the ImageMagick path will not recreate thumbnails for those items. The setting only applies for images uploaded going forward.