I can't even use the admin pannel anymore in V3 as on my server PHP is only allowed to run for 30 seconds before it gets killed. (Ex: The page where you can choose wich image you want to show as "album thumbnail". It's impossible to open in time.)
Where are you hosting? I can try to help you get a longer timeout and larger filesize if you want (may or may not be impossible depending on how your server is set up).
Also, once the thumbnails are created, they should be cached (but I can check especially on the "album thumbnail" selection and get back to you).
Sid's right, once the thumbnails are generated, it they're saved to the thumbs directory and shouldn't have to be created again. Maybe we can use some ajax magic to generate the thumbnails during the upload so you don't have to wait for them to be created the first time when looking at things in the admin panel. At least with using ajax, it can load the images and keep reloading the page to keep things from timing out, no matter how short your script timeout is set.