What I assume MisterAibo is saying is that the Illustrator file is full of jpegs. This doesn't mean you did anything wrong though. That is just, unfortunately, how Photoshop handles vector graphics. For each new shape, Photoshop creates a JPG the size of your canvas, and then masks it with the vector path that you create. When exported from Photoshop, this can create nice smooth-looking image. However, this means that there really is no good way to save the file except as a PSD.
I'll assume you're working on it. There are various objects that look like cut-outs of the original images. While this does increase the quality a bit, it still means parts of the image are bitmap-based and can't scale properly without visual distortions and whatnot. Not to mention that using jpegs - a lossy compression image format optimized for photography - is not that good of an idea. I don't know which programs you use, but it might be illustrator's fault. Check things like the right tree's trunk and you'll see what I mean. Or just open the SVG file in a text editor and look at how much <image tags there are. And most of those are used as redundant masks. I wouldn't really mind, but when you import, the larger the image, the slower the whole thing gets. I ran into similar problems earlier where inkscape would hard copy all of its textures and gradients into an SVG, effectively creating over nine thousand (not kidding) lines of ballast code. It's true that a few jpegs here and there isn't that bad - size wise, at least - but I hate to litter my vectors with bitmaps. I hope this helps. Sorry for looking a gift horse in the mouth (and your files in the code).
Hey, thanks for the info it was probably because I do all my vectors in Photoshop then transfer in to illustrator, I'm making sure to post a link to the psd files as well now to hopfully fix that problem, again thanks for letting me know about that
Actually, it would fix the issue if you just made the vectors in illustrator (or inkscape) altogether. You can still import referential images and delete them when you're done. Starting with photoshop is just adding a needless step, imho. I think SirCxyrtyx is right. PS isn't really made to operate with vectors, after all.