Nice piece of software (online) from Stanford University Artificial Intelligence Laboratory. Tested it out, below is the original greyscale bitmap image (click for source JPEG):

Update: Vector Magic is now at vectormagic.com.

And here's the vectorized result (click for PDF):

Note: the VectorMagic FAQ has this note:

"What are the white lines I see in some results?
This is a rendering problem in most anti-aliased vector renderers (Illustrator, CorelDRAW, Xara Xtreme, Ghostscript) where the background appears to "shine through" between region boundaries. We're looking into possible workarounds."

Apple Preview seems to have this problem too. When printed with an HP b/w laser there are no lines.

And here's another, a picture of some cucumber-tzatziki snacks (photo by KK):

The vectorized result (again, click for PDF):

VectorMagic outputs (at least) EPS, SVG and PNG.