Thumbnails increase useability of picture view.
A typical 8 MegaPixel photo would take long time to download on a typical UpLoad bandwidth of 128 kbps.
Searching through or previewing several photos would be so slow that the function would be useless in real use.
When photos are placed in a designated folder (f.ex the Picture share) automatic generation of Thumbnail and small viewable picture (800x600) should be done by Home Server.