Stuart and I have just released the source code for the latest version of our CSS Sprite Generator. As mentioned in my previous post the code has undergone a major refactoring and support for Image Magick has been added which greatly improves the quality of the images produced. Additionally there are options for tweaking the number of colours used in the output image, the image quality and for compressing images through OptiPNG.
Download a tar.gz of the source or check out the Bazaar branch.