I like it too! Except I've never used this account for anything other than the Naughty Dog forums so I don't think I have a PSN avatar lol. I wonder if mine will still be the gray grim reaper? Guess I'll find out when I post this...
And to be honest, I was never too fond of the old (possibly current for me) avatars. So this update is good news for me!
As for the size, I agree they're a little small. I don't know what the exact current size is but I don't want them too big either (eg, the EA forum avatars). Maybe 64x64 or 80x80?
One last thing. Despite PSN avatars being an improvement in my opinion, what about upgrading to let us use any avatar (under size restrictions) from google images or our desktop? That's how it is for most forums and would allow for the most customization / diversity in avatars.