Play with it, break it, etc. Have fun.
I tried it on this image:
http://images.google.com/images?q=tbn:cJmhzXleo1MJ:www.softlink.com.au/image...
It's small but Inkscape froze trying to "cannily" trace it (95% CPU and no screen update for at least several minutes until I killed it). Regular threshold trace worked OK, but it looks very blocky.
By the way, in general I find that inkscape/potrace output is quite blocky: it uses many small straight lines instead of a few curves. Moreover the size of these straight line fragments seems to be constant, so for small images (tens of pixels across) it's too bad to be even recognizable. This is very different from the examples that I see at http://potrace.sourceforge.net/. For example import the bitmap of the cartoon head from the front page of that site and trace it in Inkscape. Both methods give ugly blocky results, very unlike the one shown on the site. Perhaps we're setting some default options wrong.