Is it possible to convert a raster graphic into a vector graphic?
Answer: A raster graphic, which is made up of a specific number of pixels cannot be translated into a vector graphic, an image made up of paths. That being said, some programs like Macromedia Flash can create paths out of raster graphics so that they can be manipulated as vector images. This conversion typically reduces the image's size significantly, but different areas of the image are approximated, giving the image a stained-glass look.
While it is possible to create a vector image (i.e. an EPS file) from a raster graphic (i.e. a JPEG image), an exact conversion is not possible. Because of the approximations made in the conversion process, a scaled up vector version of an original raster graphic would most likely look worse than just scaling the raster graphic itself.
A quick tip if you're using Photoshop -- increasing the image size by 10% at a time often yields better results than just scaling the full amount at once.