let me splain a little further for ya
pixel based images are basically images made up of dots, this is where you see dpi and ppi from dots per inch and pixels per inch, since dots make up the image if you enlarge it you will basically see larger dots, and thus if you enlarge a pixel image you lose detail, also the more dots you have the more detail you have, and the more dots you have per inch (in printing) the more clear an image appears
vector based images are images made up of lines and shapes and the what not based on mathematics. since the image is based on mathematics, there is no loss in detail as the image size increases, just the detail itself will become larger.
vector graphics can indeed be used for a photograph, in fact genuine fractals does this, in one way and streamline does this in another, genuine fractals is a program that converts pixel based images into vector based with the purpose of enlarging an image and keeping as much clarity as possible, but you will still not get a clear image as you are still working with a pixel based image from the outset, and you cant create detail out of nothing when enlarging
as for streamline it is a conversion program for the purpose of using the graphic in a vector program like illustrator and is used more with line drawings and the such that you would scan in
as far as the operating system and the icons go, i could have sworn that the icons were pdf driven and vector based themselves, because it seems you can make them larger than 128x128 and still look quite clear (ever try the icon screen saver?) anyways im probably wrong
im just going by the way they look to me as a graphic designer