Yup, under user CP there's a link on the left to edit avatar. Go there, and it will allow you to upload a photo or to hotlink one from another site. There are size restrictions, so make sure your photo fits within the requirements.
Additionally, there's a place there for a profile photo. This is the photo that shows when people visit your profile. They're 2 seperate things, and I think the profile photos are allowed to be much larger.