As I test I made a few GIFs 96x96 in size, 200x200 in size and 192x192 in size.
The first is how they appear in the forum for me, 200x200 is the suggested size in the avatar uploader and 192x192 is the size of the preview window in the uploader.
They play at various points though all seem to be made into JPG for the posts, my current one is the 192x192 one which does not play in the forum but if you click on the user's name to get the profile mini overlay. I will leave this one up for a few hours (it is quite literally a 5 frame animation of black and white inverting).
As for the matter at hand GIF images are fine but I often found a few people ruined it for everybody and had GIF sequences to the tune of several megabytes. Granted that can and does still happen in signatures but hey.
On the other hand we do not call me to make things look pretty so I will take myself out of the discussion as far as that goes.