gistfile1.txt

$ convert -quality 80 fig.png fig.jpg

I find a quality factor of 80 on high resolution images gives good compresssion without too much loss in quality. You can then to convert the image to eps using "convert" with the eps2 settings:

$ convert fig.jpg eps2:fig.eps

If you can use level 3 postscript, you can convert directly from png to eps:

$ convert fig.png eps3:fig.eps

Using level 3 postscript from a png image file for scientific figures will often produce a very small eps file. Ghostscript is compatible with these level 3 eps files, so this is often a good way to go.