If you owed $1,500 for 2011 and everything else in your situation remains fairly stable, cut the number of allowances to 5 or maybe 4. That will put you close to even money next year without having far too much tax withheld from your pay.
If you cut it to 0 allowances you're going too far to the other end of the scale and will be severely OVER withheld next year. Your goal is to be as close to even money as possible but keep any debt below $1,000 so that you stay out of penalty territory. I'd personally rather pay $900 than get a $100 refund as I hate lending the government money interest-free.
If you want to see the effect on your take-home pay, you can run some numbers here: http://www.PayCheckCity.com
First of all, you need to understand this: your income level has nothing to do with what you get to deduct. Every single person is allowed a standard deduction of $5800. If your deductions add up to more than $5800, then you should claim them. If they don't, then it makes more sense for you just to take the standard deduction. This is true whether you earn $10K or $100K.
Now for your main question: Every allowance on your W-4 represents one personal exemption of $3700. If you're in the 25 percent bracket, then this means 25 percent of $3700 per year, which is $925 a year, or about $17.75 out of each week's paycheck.