2
Click on the Administration Menu link in the User Menu. Hover your cursor over the System Admin icon, select preferences from the popup menu, select and click Edit by User info Settings, The 11th entry down is "Allow custom avatar upload?"
Put a tick in the Yes button. Your done.
On the 12th entry on the page you can set the number of post to allow users to upload custom avitars.
Scroll to the bottom and save your changes.
HTH.