I have 300dpi jpgs of color cartoons that I made in Photoshop. They use color gradients. Bringing them into Illustrator CS2, I set the Live Trace Option at Photo Hi-Fidelity. The results were color gradients that were crude, stepped and not smooth. How can I alter options to improve smoothing?

Without seeing the artwork my suggestion would be to make the gradients in AI. You may be able to Live Trace the black outline (assuming that is the kind of cartoon you're working with), then fill the white areas with a true AI gradient.

To get a clean live trace of the outlines I would use Photoshop to eliminate the color (using the black channel as a selection may be a very quick way to get there).

In AI you could use a copy of the full color scan to quickly sample the colors that make up the gradients or just choose your on colors.

This is probably not what you want to hear, but I don't think Live Trace is the best option of such a conversion task.