I recently purchased the snake pet from trade fair, and as a level 1 pet it looked as it should - this isn't affecting performance but its a glitch nonetheless:
Now my pet is level 2 it looks (in the thumbnail/on profile) like it's upgraded picture. It is still a gray pet
Just thought you should know
Date: 24th December 2011
Time: 15:06 faeo time
So other than it not showing the right picture - there is no problem with the pet. It loads perfectly in fights and buffs me etc - and looks like gray pet in the pet menu in my bag.