Preallocating metadata (-o preallocation=metadata) reduces fragmentation on spinning disks. Full preallocation (preallocation=falloc) reserves all space at creation.
qemu-img convert -O qcow2 -c windows7.qcow2 windows7_compressed.qcow2
The -c flag enables compression. Be careful—compression reduces size but increases CPU usage during reads.
QEMU-img supports dozens of formats:
# From VMDK
qemu-img convert -f vmdk -O qcow2 windows7.vmdk windows7.qcow2