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In my opinion, because of the style of this character, it would definately benefit from a background. The blender particle system can do good hair- here is a great link to get you started
http://www.hamsterking.com/blender/particlehair.htm
happy blending

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I really like it, fun and simple, but I think it would look more interesting if you changed the camera’s position…right now you see the genie in almost perfect front view, and the oil lamp from the side.

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