working on Fidsah's lovely edit I just thought I could give a bit of random critique.
With yellow teeth>>
Had a quick go at doing this with 4 colours (if ya don't count white), I just think a bit of shape would do a lot for these sprites whether you want a restricted palette or not. I don't think you can give him noticably yellow teeth without making this character on a larger scale, you've gotta understand there isn't enough pixels to do it sucessfully, it just wouldn't read well, well I don't know what you think but I personlly think it's just a bit of a kerfuffle around the mouth.. If you where to design a game with this character you'd most likely do a larger portrait of the character.
I really like the design of this character though, there's a lot of room for expression, exaggerated movements and biting n such
goodluck with this, hope it helped.