preview-latex has a number of methods for generating its graphics. The configured default uses whatever LaTeX invocation is mapped to AUCTeX's %l command string which can be customized with
M-x customize-variable RET LaTeX-command-style RET
If this happens to be a call of PDFLaTeX generating PDF output, then GhostScript will be called directly on the resulting PDF file. If a DVI file gets produced, first Dvips and then GhostScript get called.
The default value does not call PDFLaTeX, so you might want to enter an association of the string \`pdftex\' with pdflatex before the default, so that AUCTeX will call pdflatex automatically whenever it finds a pdftex option to a class.
The image type to be generated by GhostScript can be configured with
M-x customize-variable RET preview-image-type RET
The default is png (the fastest image type). A special value can be configured as dvipng if you have the dvipng program installed. In this case, dvipng will be used for converting DVI files and GhostScript (with a PNG device) for converting PDF files. dvipng is much faster than the combination of Dvips and GhostScript and can be downloaded from the same sites as preview-latex (in fact, it is part of the CVS archive of preview-latex).