SinMagick is an open source image processing web service. You can get a copy for yourself by pulling it down from github. Alternatively you can startup a pre-configured AMI on Amazon's EC2 service for $50. The AMI has SinMagick pre-installed with Varnish and the necessary gems and libraries.
Purchase pre-configured AMI (Amazon will require you to login first)
Once you've purchased the AMI just run 'thin start -C /opt/SinMagick/config/sinmagick.yml' and navigate to http://[HOST] to get started. See /opt/SinMagick/README for information on transforms and how to use them.