JPG user photos not displaying in Drupal 7
"username picture" is likely the alt text applied to the image. So it's trying to render an image, but failing because the web server can't find it. If you check the page source, is it trying to show the image with a .png extension instead of .jpg? If not, is the path correct?

If either the extension or the path are wrong, this could be a problem with the template. Perhaps it was hard coded in the past and settings have changed since?