Skins Showing Steve

I first noticed this on a server I am part of, but it's effects also appear in single player mode. My skin looks like Steve(standard skin). It looks like steve to me. On the server, everyone else thought they were steve as well. But looking at them, they looked like their custom skin. Looking at me they thought I was my custom skin as well. In single player, I look like steve, even in third person camera view.