This week's book giveaway is in the OO, Patterns, UML and Refactoring forum. We're giving away four copies of Refactoring for Software Design Smells: Managing Technical Debt and have Girish Suryanarayana, Ganesh Samarthyam & Tushar Sharma on-line! See this thread for details.
You first need to find out what is meant by "16 bit image". A "24 bit" image generally means 8 bits of red, 8 bits of green and 8 bits of blue. For 16 bit, there's no such widely used scheme; see http://en.wikipedia.org/wiki/Color_depth#HighColor for some of the possibilities. You probably want the "5650" scheme, but it really depends on why the conversion is done; what do you know about that?