Absolutely Amazing

Checkout this amazing tool.... VectorMagic.  It converts bitmap (raster) images into a vector format.  It was created by 2 folks at Stanford and in my option does a much better job that Live Trace (at least with the sample images I used).  After creating the vector it also has some great tools to touch-up / edit the final output.  When you're done simply download the result in an EPS or SVG format.