Some of the Live Trace settings will give you a transparent background (this works best for solid color background). Give these a try. Then click the Expand button. From this point, you can save as an Illustrator file or copy/paste into Photoshop.
Simple Trace
Hand Drawn Sketch
Detailed Illustration
Tech Drawing
One Color Logo
Ink Drawing
Lettering
If that doesn't work for you, try using an opacity mask to create transparency. Check the Illustrator Help for details.
Last edited by Digital Art and Flash; 03/18/08 07:13 AM.