Tracing bitmaps with the pen tool.
There is no better way of translating a bitmap image to a vector-based than redrawing with the pen tool.

Only when you draw with the pen tool, designing with the minimum amount of points you will get a clear image that can scale down or up looking perfectly.

Live-trace can give you a good preview and a very good input for colors but live-trace shapes have too many points and don't usually scale well.

You can take frames from a video to Illustrator, or you can trace straight ahead from the video (seeing all the frames) in Flash with the same pen tool.