PSD File to Illustrator Vector - How To?

Hello all,
I have searched the web far and wide and can't seem to find any sufficient answer to the issue I'm having, which stems the following;
I've created a PSD file in Photoshop with some layers (stock images I've bought and some text), and I'm looking to get the design printed on a tshirt.  I am not very familiar with Illustrator, and the print company would like the files to be vector images, however, I'm not quite sure how to achieve this in order to get the quality they're looking for.  I thought the Live Trace option would be sufficient (I'm using CS6), and became quite giddy thinking it would be that easy (I should have known better), but the result is a grainy, crappy rendition of my PSD file (the original creation was a flyer for the event, and I took some elements from that flyer to turn into a tshirt).  My stock photos are of high quality (300dpi and about 8x10" in size), so I'm boggled as to why the trace feature turned them into poorly drawn cartoon characters.
I fear the answer would be I need to draw these stock photos out in Illustrator, but honestly, that's not feasible for me since I'm not very handy with the pen tool, nor do I have the time at the moment to sit down and learn all the ins and outs of this tool.    I've seen other tutorials clearly explaining how to turn rasterized text into a vector file in Illistrator, which is easy enough, but it not the highlight of my issue since I'm more concerned about the images themselves.
Is the only way to turn my design into a vector is to redraw these stock photos with the pen tool in Illustrator?
Should I have just used Illustrator to begin with to create my flyer and the tshirt design (does this also affect my stock photos or would I still be in the same boat)?
Any clarification you could provide would be greatly appreciated - thank you!

Sure thing - thanks so much for the help.
Here is a portion of the image that was sent back to me.  The original file is 300dpi, but this one just looks awful compared to the original (non-vector) image.
Original image versus the converted vector image:
I did use the high quality trace option which appeared to work great, but after having this returned to me I've been wondering where the heck I went wrong.  I checked my setting in AI to make sure I had everything set for maximum quality, so it makes me wonder if I didn't import/place the file correctly since, as you mentioned, the high quality trace feature should have replicated the design quite nicely.

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