It's on a local server for dev, not a live site. I'm sure it's not a caching prob. Tried it in both IE and Firefox.
Since I posted though I had a look in the data dir and there's a bunch of .mgk files, so I'm thinking IM is having a prob. Switched to GD2 and resizing mediums is fine. So I guess it's a prob at my end, not a bug. Sorry about that.