Photoshop to Illustrator (and back?)

Hi folks,

I just had a very frustrating conversation with a DTP type who uses
Illustrator to Quark to prepare items for a commercial printer.

My client wanted his logo, originally prepared in Photoshop, printed on
brochures, letterhead, etc.

I have the logo in a "large" size, 300 dpi, fully layered .psd file, and
ask the DTP type what format/size/dpi they preferred so I could email it to
them so they could integrate it into the items to be printed.

The answer was "don't bother - we'll just redraw it"   (The image was a
globe, some bordering, lettering, shading, etc. ... to be printed 2 color -
black and gold - with graduated shading)

After a bit of discussion, where in they tried to explain a bit of how
Illustrator worked (which really didn't get across to me), it became
obvious to me that if these folks were going to prepare the print ready
artwork for my client, he was going to have to pay to have his logo
"re-drawn" in Illustrator - estimated at $400+.

Can anyone please explain how images can (best ?) be shared between
Illustartor and photoshop, and when / why someone would want to use
Photoshop vs Illustrator, or vis a versa?

Thanks in advance for any insight anyone can provide.

david
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