James Cameron answered the question in a recent interview saying he wanted there be an "otherness" to the love story between Sully's avatar and the native alien, Neytiri. Since skin color is "such a big issue on our planet," Cameron decided to use that issue as a thematic driving point. Other skin tones were already taken by humans, while green was already a cliché in other alien movies. "We had big blue women, not little green men," Cameron said.
I gotta admit, I'm getting more and more excited to see AVATAR.