All of the skins on my client are Steve. Originally, player heads were also Steve, but I deleted my "versions" file, which fixed it.
This glitch only happens in 1.7.5 and 1.6.4, but Jira will not let me select those versions anymore.
In versions prior to 1.7.7 I retain my cape.
My friends see skins correctly.
Seems that deleting my versions file also fixed other people's skins appearing as Steve in SMP, but my skin is still not working.