Default Avatars Display For All After Update

Very odd this...

I upgraded to Avatars 3.8 on our test site and everything appears to be OK. I upgraded on our live site with the same setup and the Default avatars are shown for all user and blog avatars instead of the uploaded avatar. When I roll back to 3.7.1, the avatars display as expected. I've re-uploaded multiple times with no success.

Any suggestions for where to begin troubleshooting are greatly appreciated.