You can "embed" a regular image in a SVG file, in Inkscape using File -> Import (it still won't show up on Warlight). Then you can select it and use Path -> Trace Bitmap... - a new dialogue will be opened with a multitude of options.
You will obviously need to use one of Multiple scans options, personally I found scanning by colors to give better results. You should also play with various settings in both tabs (they all have help displayed on mouse-over), and you will be able to preview the result using Update button to the right.
Inkscape internally uses the potrace tool. There's another popular one called Autotrace, which you can try out online here: [](http://www.roitsystems.com/cgi-bin/autotrace/tracer.pl
). There are also various commercial converters out there which I have never used.