the thing with avatars now is that they all stretch to 165 pixels wide, regardless of their actual dimensions (the avatar's height will be changed in the same proportion as the width). so the 65x65 avatars from before just turn into these ugly things :(
for some reason, when using the "Upload your avatar" feature, it will still resize whatever you upload to 65x65, resulting in something ugly. something you can do is to upload your avatar externally (aka somewhere like imgur) and then it will look alright.