As of this moment, all avatar privileges are restored. There is a maximum width and height of 150x150 pixels. For now, only staff members can upload animated avatars (to help ease server strain), but this may change in the coming weeks and/or months.
A WORD OF CAUTION: Do not abuse these privileges. This is a strictly "abuse 'em and lose 'em" situation. Should there be a rampant mistreatment of the avatar system (pornographic or insulting avatars, etc) then they will all be removed once more. Let's hope it doesn't come to that.