Yep, I figured that out..
To the left, I just made that.. well, the butterfly I actually had in another piece that I made for a friend, but, it is possible to get avatars to look better with a little work
The best thing, if you dont draw them yourself, is to find something that is already small in size. Then when you reduce the size of it to 48 x 48, it will at least look a bit better. Also, the more vibrant colors or the use of contrasting colors, makes the pixels pop and stand out a little more.
That's about all I can offer as an artist's view. It would be nicer if TD made the size a tad bigger, as it would be hard to find pictures or reduce pictures into such a small pixel range.
~Manda~