Based on your last paragraph, not sure what it is saying (eg, "Only other option I think I can try is using Clonezilla to just make an image of the drive onto the 250" VERSUS "the problem is that I only have a 250 gig drive to use. I tried using Clonezilla but it's not happy that the "new" drive is smaller than the original"?)
Anyways, what you are trying to do I do all the time. Just resize the OS partition and image it to the smaller drive using a utility that works (eg, Drive Copy). You can always image the back up to another drive then resize the OS partition to what you want (I use "Partition Commander" because it is bundled with System Commander). Anyways, there's a shit house of free utilities out there for doing what you want. Typical:
http://www.softsea.com/software/Partition-Manager.html