I also dislike this option, and very nearly stopped the account creation process when I hit the 'male' OR 'female' dichotomy. Forcing your users to select a binary sex identifier to gender their avatars is simply not an inclusive policy. I also think it runs counter-intuitive to the mission statement.

From the Snapzu Mission Statement (emphasis added):

With our "gamified" (for lack of a better word) approach, we give all new members the ability to establish an identity based on their online actions, shares and creative works, instead of who they are away from keyboard.

By forcing me to select 'male' OR 'female' I have already lost some control over creating that online identity.

The reasoning behind this apparently necessary classification is to quote DrunkenNinja and my own interpretation:

created at a substantial cost

Graphics are expensive and we really want avatars that level, so we have to limit the types of avatars available

The male or female question has nothing to do with anything but that simple choice of the avatar style, just like if you were to create a character in an online game, ie. WoW, for example.

This is how the dev team views gender and is an appeal to tradition and generally not a good reason to just keep doing it the way it has been done

I get it, you want leveled avatars and you don't have the budget to make an avatar for every possible gender expression, I respect that because there are a lot of gender expressions in the world and it wouldn't be feasible to cover them all.

At the very least, remove the 'male' / 'female' language and replace it with 'masculine' OR 'feminine' which is a better match for the choice of gender anyway.

I would hope you could look into making a gender neutral avatar.

I would be ecstatic if we had customized avatars so I can have actual control of the creation of my online identity.