preview-latex has a number of methods for generating its graphics. Its default operation is equivalent to using the `LaTeX' command from AUCTeX. If this happens to be a call of PDFLaTeX generating PDF output (you need at least AUCTeX 11.51 for this), then GhostScript will be called directly on the resulting PDF file. If a DVI file gets produced, first Dvips and then GhostScript get called by default.
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 most efficient image type). A special setting is dvipng in case 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. You can get downloads, access to its CVS archive and further information from its project site.