3 more bugs found and fixed: 
1. failed to work when the gz contained a filename - FIXED
2. failed to work on 64-bit architecture (checksum) - FIXED
3. failed to work when the gz contained a comment - cannot verify. 
Returns some errors (not all!) and filename.
<?php function gzdecode($data,&$filename='',&$error='',$maxlength=null) 
{
    $len = strlen($data);
    if ($len < 18 || strcmp(substr($data,0,2),"\x1f\x8b")) {
        $error = "Not in GZIP format.";
        return null;  }
    $method = ord(substr($data,2,1));  $flags  = ord(substr($data,3,1));  if ($flags & 31 != $flags) {
        $error = "Reserved bits not allowed.";
        return null;
    }
    $mtime = unpack("V", substr($data,4,4));
    $mtime = $mtime[1];
    $xfl   = substr($data,8,1);
    $os    = substr($data,8,1);
    $headerlen = 10;
    $extralen  = 0;
    $extra     = "";
    if ($flags & 4) {
        if ($len - $headerlen - 2 < 8) {
            return false;  }
        $extralen = unpack("v",substr($data,8,2));
        $extralen = $extralen[1];
        if ($len - $headerlen - 2 - $extralen < 8) {
            return false;  }
        $extra = substr($data,10,$extralen);
        $headerlen += 2 + $extralen;
    }
    $filenamelen = 0;
    $filename = "";
    if ($flags & 8) {
        if ($len - $headerlen - 1 < 8) {
            return false; }
        $filenamelen = strpos(substr($data,$headerlen),chr(0));
        if ($filenamelen === false || $len - $headerlen - $filenamelen - 1 < 8) {
            return false; }
        $filename = substr($data,$headerlen,$filenamelen);
        $headerlen += $filenamelen + 1;
    }
    $commentlen = 0;
    $comment = "";
    if ($flags & 16) {
        if ($len - $headerlen - 1 < 8) {
            return false;    }
        $commentlen = strpos(substr($data,$headerlen),chr(0));
        if ($commentlen === false || $len - $headerlen - $commentlen - 1 < 8) {
            return false;    }
        $comment = substr($data,$headerlen,$commentlen);
        $headerlen += $commentlen + 1;
    }
    $headercrc = "";
    if ($flags & 2) {
        if ($len - $headerlen - 2 < 8) {
            return false;    }
        $calccrc = crc32(substr($data,0,$headerlen)) & 0xffff;
        $headercrc = unpack("v", substr($data,$headerlen,2));
        $headercrc = $headercrc[1];
        if ($headercrc != $calccrc) {
            $error = "Header checksum failed.";
            return false;    }
        $headerlen += 2;
    }
    $datacrc = unpack("V",substr($data,-8,4));
    $datacrc = sprintf('%u',$datacrc[1] & 0xFFFFFFFF);
    $isize = unpack("V",substr($data,-4));
    $isize = $isize[1];
    $bodylen = $len-$headerlen-8;
    if ($bodylen < 1) {
        return null;
    }
    $body = substr($data,$headerlen,$bodylen);
    $data = "";
    if ($bodylen > 0) {
        switch ($method) {
        case 8:
            $data = gzinflate($body,$maxlength);
            break;
        default:
            $error = "Unknown compression method.";
            return false;
        }
    }  $crc   = sprintf("%u",crc32($data));
    $crcOK = $crc == $datacrc;
    $lenOK = $isize == strlen($data);
    if (!$lenOK || !$crcOK) {
        $error = ( $lenOK ? '' : 'Length check FAILED. ') . ( $crcOK ? '' : 'Checksum FAILED.');
        return false;
    }
    return $data;
}
?>