For simplicity lets say that I have a web page that needs to display thumbnails of images. The images locations are stored in a database(the images are stored on Amazon S3).
Sure, no problem. There's plenty of resources on the web that show how to dish up an image from a database. So I won't duplicate that here.
Once you've loaded the image, you can easily shrink it using .NET. There is an example at the following URL. It doesn't do exactly what you are doing, but it does generate thumbnails of an image.
http://blackbeltcoder.com/Articles/graphics/creating-website-thumbnails-in-asp-net