I still haven't gotten it to work, atleast not on my OS X dev machine.
Might be easier when moving to production.
Only solutions I think is now in the 2.0 version you can just use
gravatar.com for icons throughout the entire site. Though I'd
personally like to have the image upload functionality for my users.
I just wish they had used something like super image or
RMagic/ImageMagic from the beginning.