Possibly a permission problem left over from the move to another VPS. I can probably try and fix it, but you asked for a suggestion. So here's one: use a gravatar. Set one up for your address and then enable it on your board profile.
Edit: ah yes, as I thought. Permission to save into img/avatars is denied. I've half a mind to just remove avatar uploads altogether and allow only none at all or a gravatar.
Just noticed a potential bug I came across on the forums. Tried to upload a 100x100 image and then a 75x75 image as my avatar and neither seem to work.
