To create a smaller size PNG images and also keeping alpha channel, first we create our images in Photoshop or other Paint tool then save into 24bit PNG (full color) with alpha, then use http://pngquant.org
to make new smaller 8bit PNG image, or use online service http://www.8bitalpha.com
In my test, I use very large wallpaper image 24bit PNG file up to 7MB with pngquant then around 10 seconds of waiting a new 8bit PNG is created with size 3,5MB (50% reduction), as far as color comparison I feel the quality is very good and much better than the 8bit resulted from Photoshop.
Using another 24bit PNG file 143,324 bytes, pngquant can create a new 8bit PNG file 35,648 bytes (75% reduction) with no noticeable color degradation, the color is very vibrant and beautiful while also keeping alpha transparency color, pngquant is very useful for website designer as long as the target audience is not using MS IE6 !!