If you are working with Drupal or anything else that complains about requiring a newer version of the GD library then you need to upgrade as follows:
1. Remove old version
sudo apt-get remove php5-gd
2. Add following lines to the file /etc/apt/sources.lst
deb http://packages.dotdeb.org stable all
deb-src http://packages.dotdeb.org stable all
3. Update and reinstall
sudo apt-get update
sudo apt-get install php5-gd
/etc/init.d/apache2 restart
