ignore Shawn.
Do this:
Use the pen tool in photoshop to trace the lettering. The magic wand is too dicey, and you'll never get the clean, crisp lines needed for text. By the time you mask that shit, you'll have wasted an hour on something the pen tool could've done in ten minutes.
Save the work path as a path. Save the image as a tif (you could go EPS, but for reasons I don't have time to explain, tif is better). From there, you can export the path to Illustrator, or create a raster image and use it in photoshop. I prefer Illustrator, because Illustrator is better suited for logo graphics (better gradient options, infinite scalabilitiy.)
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