Here are a couple of random thoughts:
It may have been developed on a 168, but was it developed on a 168 with a 2k bootloader leaving only 14k of program space?
Are you linking against a library (libwhatever.a) or an object file (something.o)? If you link against the object file, everything gets stuck in the executable. If you build a library and link against it, only the functions you actually use are included in the executable.
-j