If you click on User CP you will get lots of options to do with your account. One is "Edit Signature" and when you click it you will get a box just like a post box to play with - just use it as if you are replying to a thread.
About the 4 or 5th option down in the menu you have "Edit Avatar" and all details about size and type of file is on that page. Here is the info that appears just under the upload section
Note: The maximum size of your custom image is 100 by 100 pixels or 19.5 KB (whichever is smaller).
Hope that helps