try this.
When youre in photoshop, any selection you make (wether its with the magic wand, the lasso, etc) can be converted in a path.
For example
Let's say the jpg youre trying to vectorize is Marge Simpson's head.
Open the jpg in Photoshop (I use v.7). Using the magic wand select her yellow skin. Go to your "Paths" pallete. There will be some tabs on the bottom. Click the 3rd from the right, "Make path from selection"
Once you do this, you'll see something labed as "work path" appear in the pallete.
take this path and duplicate it by dragging it down to the "duplicate" icon on the right of the "Make path from selection" icon.
Repeat this process with her blue hair, her white eyes, her black pupils, etc etc.
Save your document as a psd.
Open it in illustrator, select it and ungroup. Press control+y or command+y to view your paths in wireframe mode!
GOOD LOOK