And yes, lollige has a pokemon trainer now too 


How I started:

3 minute edit of panda's 2 minute edit (you sure you were looking at the ref? :p)

hmm that looks like a dog..
panda's Feron's didnt that much.. >:0

Ok changed the pallete slightly, but not that much yet.. Tryd to work on the head and the left feet, but it didnt came out that good..
For feet I tried to use this reference:
http://images.encarta.msn.com/xrefmedia/aencmed/targets/illus/ilt/000f09ca.gif
for head I looked to the golden retriever image, and the ears where just made without referrence....
and im not so happy with the result

Add more shading, go all the way into semi-brights to darks with a lightsource. Needs AA badly .

Where do you think I have to add AA than?
On the inside, you wont see anything then when I have added the texture, and on the outside, its going to be transparant, so then you should make new AA on every new background!! aa has to be very different on a light background than on a dark one..

How do I improve this icon??
The fur doesnt really look like fur..

Change the lightsource like madartistan said, then maybe try some dithering, and try to remove the black lines maybe 
Dithering:
http://spriteart.com/tutorials/01_dither.html