Be careful of off-by-one errors when choosing the new maxval. For instance, if you want the color values to be five bits wide, use a maxval of 31, not 32.
One important use of pnmdepth is to convert a new format 2-byte-per-sample PNM file to the older 1-byte-per-sample format. Before April 2000, essentially all raw (binary) format PNM files had a maxval less than 256 and one byte per sample, and many programs may rely on that. If you specify a newmaxval less than 256, the resulting file should be readable by any program that worked with PNM files before April 2000.