Ed Hannigan, your method works great, but I'll have to use a third party program. PhotoShop is the king of all graphic editor. If a such simple program can handle that, I think PS will also be able to do it.

Don McCahill, your method work, but it's not better than Ed Hannigan's method. Indexing a picture will destroy all the quality of an image. When I tried to decrease the color depth with IrfanView, the picture seem to be the same. But when trying to index it with PhotoShop, lot of color are lost. Also, I'll have to make few step in other to save it as JPG 256 colors.

ID. Awe, you got my point.

I don't like to use gif. I only use it if it's a motion picture. I stil prefer the classical type.

Look at this, it's the same image:
JPG=4 KB
<http://www.siriusweb.com/ZDU/pkorg.jpg>

GIF=22 KB
<http://www.siriusweb.com/ZDU/pkorg.gif>

Source:
<http://www.siriusweb.com/tutorials/gifvsjpg/>

We can see that GIF is not always the best choice...