Looks nice to me. I like the colors used near the sprite but I don't really like the colors away from the sprite (eg. background). Nice effects though. I like v1 the most. Keep it up!
I personally don't get the point in doing sprites... they have absolutely no depth and the only artwork you put into it is the background :\
Smudging, lighting effects, C4D, some brushwork, stock manipulation, pentool......pretty much the same as any other tag