Step 1: Starting image
If you don't want to use dozens of yarns at once , it's worth tweaking your image to reduce the number of colours in it. I started with the Robot image from this topic, and used Photoshop to add extra space around it, and cut down the number of shades in the image.
Uploading the image to Pics To Knits was actually quicker and easier than uploading an image here.
Step 2: Cropping and selecting complexity
You can select the number of colours you want to play with from the thumbnails at the bottom of the screen - the more colours you choose, the more accurate the final knitted image, but the more skeins of yarn you have to juggle as you knit.
I went with the "four colours" option.