@neslug: Wait, what? Isn't that still color contrast? Although I agree, make the brights a bit brighter.
As for the edit, its a step in the right direction. First things first: You're not done clearing away waste colors. I just counted on the edit, and we're at 11+trans. With some smart cutting, we can put you at 7+trans, which is a standard color limit. The first color is an easy drop; you know that gray from the sides we trashed? Its still hiding in his left eye and the bulb at the top. NOT NECCESARY. Just replace it with a surrounding color, we don't care for it. Second, you know that light gray we took from the tooth? Yeah. Still in the eyes. You can't even see it from zoomed out, so just replace it with the white. Easy. Third, this new blue in the tooth. You don't need blue, just use an existing purple from the body. It doesn't look like the body bleeding in if it generally stays just AA in there. Now, see that light yellow in the bulb? Change it to white, there's almost no difference anyway.
Congratulations, you're at 7+trans! If you want to try holding a palette limit, go ahead. If not, say so, so I can stop typing these blocks about color count.
Now that that's done with, to the rest of the sprite! Now, unfortunately, the jaw looks spiky. I don't think it's necessary to have it jut out so far anyway.
The purple you chose to replace the gray is a bit TOO dark, but that's a hard color to get right in such a low contrast environment. Just keep fiddling with it.
I'm only noticing it now, but the chin is a bit jaggy on the left side. The forehead also has a ripple in it, it would probably look better as a perfectly round curve. Actually, I think the primary issue with the messy-looking shading is that it needs to be rounded out properly.
Also, SOMETHING bugs me about the eyes. I think the one on our left is too close for the perspective.
Just for fun, I made an edit. I got carried away a bit though, so a lot of the choices I made were stylistic ones. I could spend another hour making a basic edit JUST fixing the bare minimum, but I thought it would be nice for you to see another angle on your little creature.
New colors, colored outline, radically altered shading shapes. However, you can see what I fixed with the jaw thing, the chin, and the forehead. Also, creative color manipulation let me get another highlight out. Shit, now I sound self-centered for calling myself clever.
Here's what the shading looks like when I put it back into your colors, minus the ones I said to remove.
Also, this little guy reminds me of the one digimon, the pink one owned by the short kid in season 1, you know, the one that turned into Patamon. Can't recall its name, but it reminds me of it.
Good luck!