Did you try removing Avatar and then logging out, closing your browser and clearing the cache, before logging back in and uplaoding a new avatar ?
Another thing to try, a couple of people were having problems getting a new Banner to show. They found out that the way to do it was actually to load the banner in a different format, so if the old one was a jpg, try using a gif or a png. Just a thought.
I had no problems with changing my banner, but you do need to remove the old one first. I think it is when you try to upload a new one without taking out the old one first that makes things go wrong, but that is just my opinion.