.gif files in PS

I'm having trouble working with .gif files in PS. I've never experienced this before, but when I open the file, it says 'Index' in the Layers Palette where it usually says 'Background' for normal files. When I try to resize the image, it gets all blurry, and if you try to add text, it turns the image all pinkish. It's very odd.

Does anybody know what's wrong?

Screencap behind cut.