Your image actually has 17 colors, and I think you have some serious contrast problems. Your basic guy is actually really fun and cute, you just need to push him a bit. I did an edit to show some changes that I would make:
Mine has 16 colors. You had one color that I think was just a mistake - a darker shade on the backpack that was only in one place. However you had another color that only existed on 4 pixels in the entire picture. You had a lot of tones that were very close to each other too. I edited your image down to 14 colors and then added a skintone and an extra highlight tone for the backpack, and generally just pushed the contrast. I thickened his back leg, and added 1 pixel to the heel. I made some edits to the hat but i have no idea whats going on there - the hat's structure is not as easily readable as the other parts of the character, I would give that a second pass. I don't really mind the stubby arms on this character, but they could probably use a little attention i guess. Nice stuff, just go those extra few yards to get him all the way there!
Just remembered - one thing that might help is painting your sprites on a medium gray background, rather than solid white or solid black. That should help you get the contrast better!
EDIT - AND I just realized I edited your first pic, instead of your updated one. Sorry! Most of my edits still apply but I did not mean to ignore or throw away the changes you made already, you are headed in the right direction!
