Sometimes the best approach when downsizing for this kind of purpose is to do it incrementally - i.e. do an Image Size of 90% repeatedly until you get down into the right ballpark, then resize to 50x50.
I've just done some testing though and for images I've tried it with it doesn't seem to be the best option. I got better results sizing straight down to 50x50. Another option that gives slightly better results is to use one of the plugins or apps like Extensis SmartScale that are designed for resizing photographs bigger without losing detail -- if instead you use it to size smaller then the controls over sharpnedd and edge contrast can help a little.
A general technique is to slightly oversharpen the image before you reduce its size -- actually, I've found that probably the best single thing you can do to improve the perceived sharpness of the final 50x50 image.
Not applicable for avatars, but I shall mention here the amazingly cool "favicon from pics"
online tool that you can use for generating favicon icons (the ones that appear next to the page title on your list of Favorites in IE if the webmaster of a site has set them up properly). Not of any use for something else, but it's remarkable how recognisable a photo can be even at that tiny size. There's an equivalent tool
here, and probably a whole bunch of others out there too.