We recently had a need to convert an organizations logo from a JPEG to a vector image.
The group had long ago lost the original of their logo and only had a single copy in JPEG format (dimensions 360x390, or the size of a posted note). Needless to say, when they asked if it could be used to print a large banner I had to laugh :-)
I ran across a couple of articles providing instructions using the freely available Inkscape.
Increase Image Resolution: Convert Raster Images to Vector
How to Convert a JPEG to a Vector Image
I found the first link to be the most helpful, but both were informative.
In the end, I was able to create a vector version of the logo that is, in theory, infinitely scalable. Pretty darn cool. Thanks Inkscape and eHow / Makeuseof.com