The primary advantage of Scalable Vector Graphics (SVG) files is that a very small file can be scaled up to yield large images without the aliasing (jaggies) that appears when a bitmapped graphic is scaled up. SVG files are resolution independent, usually non-photographic and commonly carry the suffix *.svg. There are lots of free SVG files available on the Internet and there are many applications for creating SVG files such as the free, open source Inkscape. SVG files can now be viewed via drag & drop onto web browsers such as Firefox, Chrome or Safari or via the free MacOS X app, Gappin. For an excellent primer on vector graphics, see this Wikipedia article.
So the advantage of vector graphics to iBooks Author is that these images can be scaled up without making those images fuzzy with jagged edges. A single U.S. state map vector image, for example, could be used to show full screen versions of each state without any visual loss. Complex diagrams such as those produced by OmniGraffle can be included at any level of detail.
However, it is not possible to use SVG images directly in iBooks Author. If you attempt to drag and drop an SVG file onto an iBooks Author project, nothing will happen. You'll get no error messages or feedback of any kind. Similarly, apps in the iWork suite (Pages, Keynote and Numbers) will also refuse to accept SVG files. This post is about how to work around that limitation.
The iBooks Author application has its own Text, Shapes and Graphs menus with which a number of vector graphics can be created. Another option is to use the vector graphics created by Keynote, Numbers and Pages. These can be copied and pasted directly into an iBooks Author project. Graphics created in iBooks Author or any of the iWorks suite applications are vector graphics in PDF file containers, not SVG file containers. PDF files can contain text, bit-mapped graphics and vector graphics. We are most interested in the latter type, vector PDFs. The OmniGraffle application is a considerably more sophisticated graphics toolset and is capable of exporting both SVG vector drawings and PDF vector images. The latter are compatible with iWork suite and iBooks Author.
That's useful but there is an Internet full of already drawn SVG images that are in the public domain or CC licensed. It would be a shame not to have access to that vast library of free vector images. The work around to this problem is to use this on-line conversion service to convert SVG to PDF and then drag and drop that PDF directly into an iBooks Author project or into one of the iWork apps or OmniGraffle for further manipulation.
Download an *.ibooks file here that shows how vector graphics created in iBooks Author compare with vector graphics converted from SVG files. The following screencast uses that same multi-touch eBook.