[dnanian]

You're not doing anything wrong: Apple's image handling doesn't always make good use of the freed space in an image.

You can recover the space, though, using a command-line tool. Open terminal and type

hdiutil compact

Make sure there's a space after "compact". Then, drag the image file from Finder into Terminal. That'll enter its path.

Press Return, and -- after a time, it'll shrink the image down.

Hope that helps!