You forgot to use imagecolortransparent()
function. more at :
http://www.php.net/manual/en/function.imagecolortransparent.php
Taken from comments there here is an example of adding transparency
if($transparency) {
if($ext=="png") {
imagealphablending($new_img, false);
$colorTransparent = imagecolorallocatealpha($new_img, 0, 0, 0, 127);
imagefill($new_img, 0, 0, $colorTransparent);
imagesavealpha($new_img, true);
} elseif($ext=="gif") {
$trnprt_indx = imagecolortransparent($img);
if ($trnprt_indx >= 0) {
//its transparent
$trnprt_color = imagecolorsforindex($img, $trnprt_indx);
$trnprt_indx = imagecolorallocate($new_img, $trnprt_color['red'], $trnprt_color['green'], $trnprt_color['blue']);
imagefill($new_img, 0, 0, $trnprt_indx);
imagecolortransparent($new_img, $trnprt_indx);
}
}
} else {
Imagefill($new_img, 0, 0, imagecolorallocate($new_img, 255, 255, 255));
}