Use the following code to generate the scaled Image which will be scaled to given PictureBox....
In this you can change the size of PictureBox and see how resizing works..

using System;
using System.Collections.Generic;
using System.ComponentModel;
using System.Data;
using System.Drawing;
using System.Text;
using System.Windows.Forms;
using System.Drawing.Drawing2D;

namespace ImageTest
{
    public class Form1 : Form
    {
        public Form1()
        {
            InitializeComponent();
        }

        private Button btnLoadImage;
        private PictureBox pictureBox1;
        private ColorDialog colorDialog1;

        /// 
        /// Required designer variable.
        /// 
        private System.ComponentModel.IContainer components = null;

        /// 
        /// Clean up any resources being used.
        /// 
        /// true if managed resources should be disposed; otherwise, false.
        protected override void Dispose(bool disposing)
        {
            if (disposing && (components != null))
            {
                components.Dispose();
            }
            base.Dispose(disposing);
        }

        private void btnLoadImage_Click(object sender, EventArgs e)
        {
            using (OpenFileDialog fd = new OpenFileDialog())
            {
                if (fd.ShowDialog() == DialogResult.OK)
                {
                    try
                    {
                        using (Image img = Image.FromFile(fd.FileName))
                        {
                            ProcessImage(img);
                        }
                    }
                    catch (Exception ex)
                    {
                        MessageBox.Show("Error processing Image File" + Environment.NewLine + "Please check that file is valid image");
                    }
                }
            }
        }

        private void ProcessImage(Image img)
        {
            Rectangle newRect = GetScaledRectangle(img, pictureBox1.ClientRectangle);
            pictureBox1.Image = GetResizedImage(img, newRect);
        }

        #region Windows Form Designer generated code

        /// 
        /// Required method for Designer support - do not modify
        /// the contents of this method with the code editor.
        /// 
        private void InitializeComponent()
        {
            this.btnLoadImage = new System.Windows.Forms.Button();
            this.pictureBox1 = new System.Windows.Forms.PictureBox();
            this.colorDialog1 = new System.Windows.Forms.ColorDialog();
            ((System.ComponentModel.ISupportInitialize)(this.pictureBox1)).BeginInit();
            this.SuspendLayout();
            // 
            // btnLoadImage
            // 
            this.btnLoadImage.Location = new System.Drawing.Point(377, 110);
            this.btnLoadImage.Name = "btnLoadImage";
            this.btnLoadImage.Size = new System.Drawing.Size(75, 23);
            this.btnLoadImage.TabIndex = 0;
            this.btnLoadImage.Text = "Load Image";
            this.btnLoadImage.UseVisualStyleBackColor = true;
            this.btnLoadImage.Click += new System.EventHandler(this.btnLoadImage_Click);
            // 
            // pictureBox1
            // 
            this.pictureBox1.BackColor = System.Drawing.SystemColors.AppWorkspace;
            this.pictureBox1.Location = new System.Drawing.Point(29, 46);
            this.pictureBox1.Name = "pictureBox1";
            this.pictureBox1.Size = new System.Drawing.Size(200, 200);
            this.pictureBox1.SizeMode = System.Windows.Forms.PictureBoxSizeMode.CenterImage;
            this.pictureBox1.TabIndex = 1;
            this.pictureBox1.TabStop = false;
            // 
            // Form1
            // 
            this.AutoScaleDimensions = new System.Drawing.SizeF(6F, 13F);
            this.AutoScaleMode = System.Windows.Forms.AutoScaleMode.Font;
            this.ClientSize = new System.Drawing.Size(514, 366);
            this.Controls.Add(this.pictureBox1);
            this.Controls.Add(this.btnLoadImage);
            this.Name = "Form1";
            this.StartPosition = System.Windows.Forms.FormStartPosition.CenterScreen;
            this.Text = "Form1";
            ((System.ComponentModel.ISupportInitialize)(this.pictureBox1)).EndInit();
            this.ResumeLayout(false);

        }

        #endregion

        public static Rectangle GetScaledRectangle(Image img, Rectangle thumbRect)
        {
            if (img.Width < thumbRect.Width && img.Height < thumbRect.Height)
                return new Rectangle(thumbRect.X + ((thumbRect.Width - img.Width) / 2), thumbRect.Y + ((thumbRect.Height - img.Height) / 2), img.Width, img.Height);

            int sourceWidth = img.Width;
            int sourceHeight = img.Height;

            float nPercent = 0;
            float nPercentW = 0;
            float nPercentH = 0;

            nPercentW = ((float)thumbRect.Width / (float)sourceWidth);
            nPercentH = ((float)thumbRect.Height / (float)sourceHeight);

            if (nPercentH < nPercentW)
                nPercent = nPercentH;
            else
                nPercent = nPercentW;

            int destWidth = (int)(sourceWidth * nPercent);
            int destHeight = (int)(sourceHeight * nPercent);

            if (destWidth.Equals(0))
                destWidth = 1;
            if (destHeight.Equals(0))
                destHeight = 1;

            Rectangle retRect = new Rectangle(thumbRect.X, thumbRect.Y, destWidth, destHeight);

            if (retRect.Height < thumbRect.Height)
                retRect.Y = retRect.Y + Convert.ToInt32(((float)thumbRect.Height - (float)retRect.Height) / (float)2);

            if (retRect.Width < thumbRect.Width)
                retRect.X = retRect.X + Convert.ToInt32(((float)thumbRect.Width - (float)retRect.Width) / (float)2);

            return retRect;
        }

        public static Image GetResizedImage(Image img, Rectangle rect)
        {
            Bitmap b = new Bitmap(rect.Width, rect.Height);
            Graphics g = Graphics.FromImage((Image)b);
            g.InterpolationMode = InterpolationMode.HighQualityBicubic;
            g.DrawImage(img, 0, 0, rect.Width, rect.Height);
            g.Dispose();

            try
            {
                return (Image)b.Clone();
            }
            finally
            {
                b.Dispose();
                b = null;
                g = null;
            }
        }

    }
}

This post will help you to create High Quality Thumbnails or can Resize the image
The GetThumbnailImage() method of Bitmap class produces a thumbnail image from the file specified. Life is so easy with it. Not always though. Sometimes the thumbnails produced are low quality - pixelated and blurred

Why it Happens?

Image formats like jpeg may store the thumbnail inside the same file. If we use System.Drawing.Bitmap method GetThumbnailImage, method checks if there’s a thumbnail image stored into the file and, if the thumb is found, it returns that thumbnail version scaled to the width and height you requested. If the thumbnail version of the image is smaller then the size you requested to produce, thats when problem occurs. The thumbnails produced become pixelated as we know stretching an image to a larger once reduces the Image Quality.

Solution

First of all you will need to include the reference of following namespaces

using System.Drawing;

using System.Drawing.Design;

Use the following code to create High Quality Thumbnail/Resize the image.

string originalFilePath = "C:\\originalimage.jpg"; //Replace with your image path

string thumbnailFilePath = string.Empty;

Size newSize = new Size(120,90); // Thumbnail size (width = 120) (height = 90)

using (Bitmap bmp = new Bitmap(originalFilePath))

{

    thumbnailFilePath = "C:\\thumbnail.jpg"; //Change the thumbnail path if you want

    using (Bitmap thumb = new Bitmap((System.Drawing.Image)bmp, newSize))

    {

        using (Graphics g = Graphics.FromImage(thumb)) // Create Graphics object from original Image

        {

            g.SmoothingMode = System.Drawing.Drawing2D.SmoothingMode.HighQuality;

            g.InterpolationMode = System.Drawing.Drawing2D.InterpolationMode.High;

            g.CompositingQuality = System.Drawing.Drawing2D.CompositingQuality.HighQuality;

            //Set Image codec of JPEG type, the index of JPEG codec is "1"

            System.Drawing.Imaging.ImageCodecInfo codec = System.Drawing.Imaging.ImageCodecInfo.GetImageEncoders()[1];

            //Set the parameters for defining the quality of the thumbnail... here it is set to 100%

            System.Drawing.Imaging.EncoderParameters eParams = new System.Drawing.Imaging.EncoderParameters(1);

            eParams.Param[0] = new System.Drawing.Imaging.EncoderParameter(System.Drawing.Imaging.Encoder.Quality, 100L);

            //Now draw the image on the instance of thumbnail Bitmap object

            g.DrawImage(bmp, new Rectangle(0, 0, thumb.Width, thumb.Height));

            thumb.Save(thumbnailFilePath, codec, eParams);

        }

    }

}