Avatars are 75pixel by 75pixel images where the file size can be no larger than 26 kilobytes. It can be a jpeg or a gif, animated or still.
Those are the rules, other than that it's up to you. I would suggest keeping them at a PG rating ... some people get away with PG-13, but it's probably not wise if you would like to stay on the good side of the moderators and site owner (:
