Not to throw a wrench in this development... but your version was actually closer to what is correct for this specific style. JD's form of shading only works for his unique style. It's a cell-shaded style and uses directional lighting ( from the left in this case) rather than normal centralized lighting as you had it before.
This is an asymetrical way of shading sprites and will prove to be not only more difficult, but because nothing else on your sprite shares this lighting technique , it throws off the sprite's balance. A good example of this style of pants is in my sig (third sprite from the right)
Another thing you may want to consider is altering the the curve of the wristbands to a downward curve . This will give it a sort of "top view" illusion.
you had the right Idea before. You've rendered the fold lines and only needed to add the shading. I'd like to edit this to show what I mean, if thats cool with you
