To save space, you can compress data produced by dd with gzip, e.g.:
dd if=/dev/hdb | gzip -c > /image.img
You can restore your disk with:
gunzip -c /image.img.gz | dd of=/dev/hdb
To save even more space, defragment the drive/partition you wish to clone beforehand (if appropriate), then zero-out all the remaining unused space, making it easier for gzip to compress:
mkdir /mnt/hdb
mount /dev/hdb /mnt/hdb
dd if=/dev/zero of=/mnt/hdb/zero
Wait a bit, dd will eventually fail with a "disk full" message, then:
rm /mnt/hdb/zero
umount /mnt/hdb
dd if=/dev/hdb | gzip -c > /image.img
Also, you can get a dd process running in the background to report status by sending it a signal with the kill command, e.g.:
dd if=/dev/hdb of=/image.img &
kill -SIGUSR1 1234
