StudioWorks is right. Illustrator is much better for vector art. You can save photoshop files as .eps, but if you're importing bitmat images into your final image, you're gonna be in the same place as you started. There will still be degradation when resizing.
What I do, when I need vector art...I do all my shapes in Flash, then copy & paste into Illustrator. I find Flash a whole lot easier to work with for creating images. And it copies into Illustrator like a charm.
