Ok, well then see zahand's answer above. Currently you are operating on the pixel array of the sketch, which of course doesn't work when the dimensions are different (and is wrong anyway). You need to do the pixel operations in the drawMap() method on the actual MapIMG! Change lines 15, 20 and 23 to operate on the MapIMG as suggested by zahand already.

Besides that your code is inefficient, because you are continuously doing something in the draw() loop that you could also do just once in setup(). Of course if you intend on creating dynamic animations with the grid, then it would make sense, but for a static grid it doesn't.

Adapted Code

1. PImage mapIMG;
2.  
3. void setup() {
4.   size(600, 600, P2D);
5.   initializeMap(500, 500);
6. }
7.  
8. void draw() {
9.   background(0, frameCount%255, 0);
10.   image(mapIMG, 50, 50);
11. }
12.  
13. void initializeMap(int w, int h) {
14.   mapIMG = createImage(w, h, RGB); 
15.   color c = 0;
16.   mapIMG.loadPixels();
17.   for (int x=0; x<mapIMG.height; x++) {
18.     for (int y=0; y<mapIMG.width; y++) {
19.       if ((x%20)==0 || (y%20)==0) {
20.         c = color(int(50 + x/2.5)) ;
21.       } else {
22.         c = color(0);
23.       }
24.       mapIMG.pixels[x + y*mapIMG.width] = c;
25.     }
26.   }
27.   mapIMG.updatePixels();
28. }