@varish: Indeed, you won't have your head twisting when you walk. Instead your *body* twists slighltly. That's something that's hard to render at low scales and thus twisting the head itself is used as a trick to convey the "feel of walk" with your sprite in the same way that you'd do with a move-limitted puppet.
So imho, it fits the retro-minimalistic style nicely, but indeed, you need to be aware that it's a caricature of an actual movement and be wise not to apply it to graphical styles where it doesn't belong. -- somehow, that's seconding iggywork's point.
@dekthro: the change on the eye is a nice improvement. Maybe "angling" the cap of his hat could break the feeling that the hat is fixed though the head moves. I'll try an edit later in the day if I find some time for that.
