XV does a very good, albeit interactive, job at image conversions !

load the image in any format, and then save it as Postscript (with the
extension .eps), don't forget to set the compression (which is only
available for 8 bit colour images and reduces the image size by a factor
of 10 compared to non-compressed.) XV also offers easy ways of editing
and reducing the colours. 

Ofcourse you can also use PC-based tools like Corel Draw.

The quality has so far never disappointed me for technical purposes.


Good luck !

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