Not sure if this is the true problem with Tweetie or something related to Twitter's avatar cache (I know they have been having issues but of what nature I don't know); my PNG avatar did not show up in Tweetie when first launched it. It hasn't shown up in Tweetie for iPhone for weeks. After giving it some thought I figured it might be the file format I was using which was a PNG. I re-exported the image from photoshop to JPEG and it seems to work fine for the Tweetie Mac. I can't confirm if this work around does or does not fix the problem in Tweetie iPhone as it has yet to re-cache there.

Unrelated: LOVE Tweetie both on iPhone and Desktop. Keep up the great work atebits!