Some designers may know that "Live Trace" is similar to "Corel Trace" in Corel Draw.
This tutorial is quite basic showing how to use the Live Trace feature.
To use Live Trace, you should start with a high resolution image (raster) because it will give you a much better result when you convert it to vector art.
(This should be a high quality raster image like jpeg, tiff or png.)
2. Your original graphic will be displayed.
You can also use Live Trace in the color mode for advertising or multi-color work as well.