If you enlarged or zoomed too much on a photo before you will notice pixelation effect.
Because all photographs and most pictures are actually a grid of very small picture elements, or pixels, when you zoom in, you see these ugly rectangles. Just like zooming in too much on a photo on a book or newspaper reveals the dots. With a vector drawing program, like Adobe Illustrator or Inkscape or others, your picture or drawing is actually made up of lines and curves. Even when you zoom in, you will not those pixels. You will still see smooth lines and curves. You will also be able to a lot more with Vectors, like smooth resize, skew, and distort.
Note however that Vectors are generally not suited for photographs. They are best suited for things like line art, signature, logo, or other such things. You can however vectorize an image if you want to make a really huge poster and don't want people getting close and seeing the pixels. They do look terribly annoying and unprofessional.
So, how do you convert from Pixels to Vectors? Many systems are available, including those from Adobe, Inkscape, and some other Open Source programs but non are as easy, or free as VictorMagic.
VictorMagic makes it very easy with a Wizard type User Interface. You upload your picture, select the kind, tune it, and then an EPS, PNG or SVG vector file.
There is no need to go through a tutorial or how to. It is dead easy, just go to the site and start playing.
Unfortunately I could not find a place to upload the test Muffins picture I posted earlier. flickr and Blogger do not allow uploading SVG pictures. But you can see samples on the VictorMagic site.