With the Google Panda update you have more control over the look of your Youtube channel.
You can select change your background picture, feature playlists and channels all on your front page, and change your profile picture (avatar).
Go to Test Tube and click to participate in Cosmic Panda for Youtube.
Then go back to edit your channel in the new Channel Editor where more options will be available. For example under Appearance you can now finally upload an Avatar picture!
Read more about the cosmic panda update here