Plugin: Magic Thumbnails
When Magento creates thumbnails, it places a white background behind the image. This plugin lets you customize the color to the color of your choice. It can also automatically pick an appropriate background color for each image.
To customize the plugin, go to Admin->Configuration and you'll see the Magic Thumbnails menu on the left.
Extract it to your Magento directory
Set the default background color on the Admin->Configuration page, and clear your images cache
I hope you find this plugin useful. If you find any bugs, or have any ideas on how to improve this extension, please post a comment below!
Download Magic Thumbnails here
Update: The plugin can now be installed from Magento Connect