Help with logo for tshirt

I have a client who asked for their logo to be readied for printing on a tshirt. As I understand it, tshirts are done in process color not registration. So I need a file or layer for each color - correct?

They also want the option of turning into a 4 color, 3 color, 2 color design depending on what they can afford to print in a given year.

So what is the easiest way to go about this? Right now I have it taped to a lightbox getting ready to trace each color layer, scan it in and then convert to paths, export to illustrator . . . . it just seems like there should be an easier way.

Help!

Here's what their logo looks like . . .

I'd just scan the entire thing and place it in illustrator. Then use the trace tools within Illustrator to make it vector. From there, you can make it whatever the client wants it to be. Trace, scan, path in PS.... then to Illustrator.... sheesh....You don't have to do all that hand work anymore.

~t