These guys developed a new algorithm to upscale pixel graphics. On most source material it's much better than existing upscalers.
Here is the document with lots of images: http://imgur.com/a/gRXPJ
There is a sample video with a snippet of Super Mario gameplay processed with their upscaler/vectorizer:
Video: http://ifile.it/gj1tlk5/video_ours_4x_h264.mp4
Alternative link: http://www.filesonic.com/file/1061063604/v...urs_4x_h264.mp4
Edit: Better source with PDF, more pics, videos.