Hi Amiten,
Here is the rules I stuck too when using 15 colour computed sprites in my game:
1 - Draw your sprite images on a 32 colour screen and make sure you only use colours 16-31 on your sprites. This is the only range of colours sprites can use and there are more rules if you want to have 3 colour sprites. I used the object grabber program in AMOS to create a sprite bank.
2 - At the start of your program, make sure you hide the mouse pointer and run command: Set Sprite Buffer 256. This increases the height of the hardware sprites used to make computed sprites to maximum.
3 - When opening a screen for sprites, run command: Get Sprite Palette. This makes sure you will use the right colours.
4 - For computed sprites, make sure your sprites are numbered in the range 8 - 62 and do not use odd numbered sprites. This is important because you have no control over which hardware sprites are used to generate computed ones and having odd numbered sprites can cause problems.
5 - When positioning a sprite onscreen use the following command: Sprite NUMBER,X Hard(X Co-Ord),Y Hard(Y Co-Ord),IMAGE. The functions X Hard() and Y Hard() are important because they convert the hardware co-ordinate of the sprite into a screen co-ordinate, otherwise the sprite will not display in the location you want it too.
Limitations of sprites mean that for every horizontal or vertical line on the screen display there can only be 64 pixels of sprite. If there are more pixels in a line then the sprite switches off. In a moving action game this appears as sprite flicker but in a static display they will not show up if aligned in a grid. This limitation is improved to 128 pixels a line when using 3 colour sprites, but I didn't get to grips with those.
I think your game is a very close rendition of Psst! I have never played the original, but I found a video online of the Spectrum version and it is very similar.
If you use sprites for your bugs you will run into more problems with flicker because they are long in the X Axis - I guess 32 pixels? This would mean you could only have two of them on one horizontal line before the switching off happens. I think Bob's would be best for your bugs and maybe use sprites for your bullets.
Hope this is of some help to you and sorry if it is information you already know.
Cheers!