So, yeah, he's a rabbit. Nose, and his buck teeth on his face.
Either way, body's too short. The whole thing seems to be horribly unbalanced, so I have no idea how it manages to stand up.
but but but but.....it's a cartoon character for a video game..it doesn't have to be anatomically correct and all that stuff 
I mean, I can't imagine Jim Davis's publisher saying that the cat he's just drawn for his cartoon strip just wouldn't be able to stand up with that large head and the smaller fat body...or Warner Bros telling the artists of the Looney Tunes characters...well, you know 
I like to think of it this way: if you have to explain what everything is to people who don't get it--and the majority of people who
look don't get it--it's not very readable, and you'll probably have to redo it.
First off what Puppet said about ditching the outlines is kinda right. From experience I find that black outlines don't really look good. On a draft of the sprite, perhaps.
Then, do you really need dithering on a sprite this small? IMO, dithering should only be used on larger sprites, or if you have a low palette of only a few colors or less.
One thing to note, the feet follow what seems like an isometric perspective of sorts. This is partially lost on the body, and completely on the head. See this guide?
This is what I mean.
Let me try to fix it...
...Well, I tried to fix it. (Also redid palette.) Not entirely satisfied with the result--I think I lost the proportion of the character a bit--but you get the idea. (And added a mouth as well, so the buck teeth are more readable.)
