
Dennis-

Here's the production flow:

Make .eps files using Illustrator, xfig, etc.

Use the unix cmd epstopdf to convert the eps file to pdf

Use unix cmd pdflatex to generate a pdf from the latex file, or latex to 
make a dvi

My understanding is that if you have both .eps and .pdf versions of your 
graphics available, you can refer to the file without the extension in 
the \includegraphics command, and the appropriate version will be chosen 
as appropriate (i.e., pdf for pdflatex, eps for latex).  I haven't tried 
the latter, but it works will with pdflatex.

I made a quick example, with latex file and graphics: 
http://cat.nyu.edu/~crispy/example.tgz

-crispy

