Starting a new paragraph for each peice of dialog?

I don't see anything wrong with the first way. If I was writing it I'd use that one.

No, that seems all right. If the spoken words are part of the action that the paragraph is about (that sounds awkward...), there is no need to break it.

What is important is to keep different speakers separate.

I'm going to disagree slightly. I don't think it's a problem if some of the dialogue is part of a narrative line (although a new speaker will get a new paragraph). In the example you gave I think it would be better to begin the dialogue on a new line because you include additional action as well as a dialogue tag. I don't know that there's a hard and fast rule about this but I think it looks awkward to have it on the same line when you have that condition. Also, if there is very much dialogue (more than a few words), then I think it works better to put it in a new paragraph.

I'm with alleycat.

In the reader's mind, the new paragraph also creates a small pause. I think it sounds better, especially with the example you give. Suzy would not say "hello?" immediately after knocking on the door. She would wait to see if anything happened. The new paragraph gives us that pause.

My shot at it (without changing any of the wording):

“You go after our animals!” said the first sprite. The pitch of its voice made her [I would probably prefer a name here] wince slightly, too high for comfort.

“I was hungry!”

If you left the pronoun in, I might think about breaking it into three sentences:

“You go after our animals!” said the first sprite.

The pitch of its voice made her wince slightly, too high for comfort.

“I was hungry!”


---

“Stop it!” she screamed at her memories. “Leave me alone!”

But they continued to cause her grief. Wiping more tears, she continued her stagger into
the darkness.

I guess in the end, what matters is whether it's clear to the reader, and if the dialogue you're putting in the same sentence with narrative is closely related. That is, that the dialogue is directly related to the action or thought that has preceded it. Or vice versa.

Again, I don't think there could be a rule that covers all cases. You'll be fine if you generally put new dialogue in a new paragraph, and only do it otherwise when it just seems "more right" to you. I do it too at times. Sometimes it just does seem right to put the dialogue in the same paragraph as the action.

I'm usually a pillow for a cat, by the way. Or as she liked to think of me, her human heating pad.