Alright so my gun was acting up for a little while when i was playing with my friends. I turned up the velocity because my paintballs were sinking after only like 25-35 feet from where i was. (i have a tipmann 98 custom, stock and 16'' barrel if that helps).

So after i turned the velocity up (not much) it shot fine but it wasted CO2 like no other, i went through 33oz of CO2 when my friends went through 9oz.

Did you all shoot about the same number of shots, or did you shoot significantly more than your friends?  Were you getting huge white clouds out of the barrel each time you shot?

So i took the gun to the local shop and to Dicks sporting goods and both of them said it was probaly my velocity.

Additional information about your marker set up is also a good thing to provide when you ask for help.  This is why many people include a description of their marker, including modifications, in their sig.  Since this wasn't provided, I will have to assume that your marker is stock with the exception of the 16" barrel.  If this is the case, the information you received from both shops was incorrect.  Adjusting the velocity on a stock Tippmann does not significantly increase/decrease propellant usage.  The Tippmann velocity adjustment system is based on a flow interruption principal.  Basically the adjustment screw protrudes into the path of the air and restricts its release.  With this system, the same approximate amount of propellant is released each time the marker is fired, the only thing that is altered is the speed at which it is released from the valve.

Not sure if thats whats wrong, if anyone else had this problem, howd you fix it?

Haven't had this specific problem.  Your situation could be caused by many things including environmental conditions (CO2 is less efficient in colder weather), but since your friends markers worked okay, I will rule this out.  You should check for leaks from both the tank and the marker.  You can do this by listening to the marker when it is aired up and submersing the tank and looking for bubbles.  You should also check the bolt o-ring for damage/wear and the linkage arm for damage.  Either of these issues could allow air to escape back past the bolt which decreases efficiency.  Also make sure that your barrel is tight; some times they work loose and this causes problems as well. 

And just to try and fix it myself, how do i lower the velocity? i know the Alen wrench part but what way do i turn to lower it? and if it is completely lowered, about how many turns should i go?

Turning the velocity screw clockwise decreases velocity and the opposite way increases velocity.  However, because of the way the Tippmann velocity adjuster works, anything more than four turns counter-clockwise from all the way in is generally useless and sometimes counter productive.

By asking "how many turns," I am assuming you want to know where to set the velocity screw for the correct playing velocity.  Velocity is not determined in that manner.  The only way to determine/set the velocity of your marker is to use a chronograph to measure the speed in feet per second (fps) that it is shooting at. 

Also on my gun, the "part" inside when u turn the wrench, moves in and out, when it's all the way in, its at minimum velocity right?

Yes, all the way in is minimum velocity.

Thanks for the help :)

Your welcome.  I suggest that you browse the stickied posts in each forum for some useful general paintball information.