Sometimes the avatar uploading just doesn't want to work at all.
All I can suggest you to do is make sure it's 75x75 in size, make sure that no data like comment, author, and that kind of information is saved with it.
Just keep trying at it, and hope for the best.
Also be sure to reload the page with F5 to see if the avatar has updated.
If 75x75 doesn't work, I've heard sometimes people have had luck with 74x74.