Edit: 
Oooh, that looks so much better, the squash really makes it satisfying to look at. I'm trying to work it into my version now, but the software i use doesn't stretch or squash images (it's macromedia flash w/ an extension) so i have to redraw the image each frame.
It'll do for now, but i really think the process would be sped up with better software. I'm thinking about aesprite or graphicsgale since they both have free versions, any thoughts?
also on the sprite in general, why didn't you remove the double pixels on the body?:

I felt as though leaving the double pixels gives the cloth a sense of thickness, but i think ill go with what MysteryMeat had to say, i kinda dig the look.
Thanks for the help.