There's an app called Vector Magic ( http://vectormagic.com ) which produces phenomenally accurate vectorizations of bitmaps.
Only problems are that its closed-source and outrageously overpriced.

Is anybody working on potrace or any other open source project which is able to produce similarly high quality results?

I'm not sure how active Potrace's development is. For reference, Potrace is what Inkscape uses for it's Trace Bitmap function.

I wouldn't expect to find a free utility that works as well as VectorMagic. If there was one, VectorMagic wouldn't be able to charge their outrageous prices But for most of us, Inkscape's Trace Bitmap is good enough.

There is a free online software: http://www.colortracer.com still in beta, but usable.

Thanks for pointing it out. If you have to register to use it, then it's a shame they don't provide more examples. I don't like having to jump through hoops just to see how well it works... so I won't

I think it's strange that their demonstration vectorises a photo. Vectorising a detailed photo and trying to make it look like the original is pointless.