Do you mean .JPEG?
The size seems fine. Something else seems to be the problem. Are you uploading the image from your hard drive?
Upload a custom avatar file is available at the bottom of this page: http://www.fredmiranda.com/forum/avatar.php
I keep getting my old avatar back after I've uploaded a new one. I've tried using none and also a pre-slected one but my old one is still there.
EDIT: I have been able to save it as either none or one of the pre-selected ones. But when I try to upload a new one from my files it goes right back to my old one. The new one I'm trying to upload is 53x60px at 12.5 KB.
One more EDIT!!! It worked, all I had to do is refresh the browser.