Here is my take on your model, to be honest, i loved that cartoon style, and think that if you only could make the head verticaly oval instead of horizontaly ovel, it would be perfect. I made this version, the left is directly made over your model, and the right is one i altered based in the opinion of by little brother, as you can see, it is a very light alteration.

Here are some tips:
- Ever walk with a pallete on your side.
- Depending on the number of shade per color you chose, the shading may change, but never use the dark outline and light filling, it look bad.
- To make your pallete, take from other sprites from other games or even from the image, creating your own color is an useless effort and will simply look bad (I know that because i tryed it for a long time before, and it always looked like plastic)
- Try looking at sprites that have the shading you are trying to use, or even paste one sample in the side of the the sprite you are making, this way reference is a lot easier.
- Try out differet depts in shading, this sprite is only a sample, if you fill like it, create various paletes and recollor, to see wish effect look better.