Nice.
Heres my thoughts:
Ok, why is the fire not the light souce?
Whats up with the tail? It needs a correct shape and shading (according to the fire light souce)
You should also use lighter colors for the eyes, to avoid the huge contrast.

Worked on it some more:

For starters, #1. Dithering isn't going to do anything other than add unwanted texture. Charmander has always been depicted with a smooth texture (as the case with most pokemon). You did improve the palette a ton; keep those reds, they're working.

You gotta get away from pillow-shading. You continue to follow the contour that the outlines establish rather than shade with shape and volume in mind. Tell me, when you look at your charmander's belly/abdomen, protruding and ball-shaped, what kind of shading comes to mind? Where is the light source? From above? If so, then direct the shading to below the shape rater than to the left.

The beauty of pixel art is that no mistake is irreversible -- if you go too dramatic with the shading, you can always tone it back down, unlike other mediums. Experiment experiment experiment, until you find the right option. Try looking at Delicious's work to see how hard-edge shading can be expertly executed.

I think I'm done.


Edited by Bam112 - 27 May 2012 at 11:52pm