BuddyPress.org

Okay, I missed the fact that you were working within a template. It thought you were looking to create a widget.

Instead of creating a function within bp-custom.php, you can place this is your template file. I assume that you have made a copy of the default themes and are modifying your copy, not the original.

Change this one line:

<a href="<?php bp_the_site_member_link() ?>"><?php bp_the_site_member_avatar() ?></a>

To this:

<a href="<?php bp_the_site_member_link() ?>"><?php echo bp_core_get_avatar( bp_get_the_site_member_user_id(), 2 ) ?></a>