The setting is in wordpress under discussion I believe
Yea, I don’t think that was required before because that affects the member avatars too. but I did try that setting and it didn’t work.
give me 5 mins to get my install back up and running and I’ll try to point you in the right direction 
In my version 1.2.10 it’s under general settings for buddypress.
my 1.5 installation fell over so I’m not sure where it is in 1.5 but if I can get 1.5 up and running I’ll re post and tell you the location.
I had Identicon avatars running on 1.5 so I know there is a setting, I just can’t remember where it is in 1.5 
In my version 1.2.10 it’s under general settings for buddypress.
my 1.5 installation fell over so I’m not sure where it is in 1.5 but if I can get 1.5 up and running I’ll re post and tell you the location.
I had Identicon avatars running on 1.5 so I know there is a setting, I just can’t remember where it is in 1.5 
You can throw in the following code in your /wp-content/plugins/bp-custom.php file:
`function my_group_avatar_default() {
global $bp;
// change ‘identicon’ to anything listed here:
// http://en.gravatar.com/site/implement/images/#default-image
$bp->grav_default->group = ‘identicon’;
}
add_action( ‘bp_init’, ‘my_group_avatar_default’ );`