I used a very dark grey around his eyes and mouth for shadows but quickly switched to a light grey for the body curve shadow. It also looks like he has a squashed bug on the bottom of his shoe but that's just because my stitches are not as consistant as I'd like them to be. I like how the sprites have double layered outlines. I wasn't sure if I wanted to make the outline thinner but I did it in Paint.net and it made Yoshi look shallow. It still bugs me now with the thick outline, but the thin outline would've bugged me much more.
I LOVE how this is going so far. Don't worry, I'll update sooner this time since I'm on a roll for stitching.