We just updated the latest version of the plugin and there appears to be a bug related to using get_avatar() when specifying a size.
Basically we have a page which lists a bunch of contributors e.g.
Previously we specified a size of '200' and it displayed the avatars/images fine.
After the upgrade all the images have defaulted to gravatars.
I've looked into it (a little) and basically the only time I can get it to display the avatar is when I use get_avatart() with no size values or if I change avatars.php on around line 1333 to be something like
Even if I specify a size like 96 I still get http://cl.ly/image/1K2K3f3T3W2R
At the moment I am going with approach 2 just to make sure the images are showing.