If a logo is VECTOR it can be resized 2 be put on anything. It's purely for versatility. Learn abot how logos are created, all real logos are vector for that one simple fact.
yeah but its much harder to work in that kind of environment. Making a normal sized logo and being able to blow it up to that size is the best way to do things.
You can use photoshop, but the best vector tool is probabaly Adobe Illustrator (Macrmedia also has a vector tool called freehand) and vectors can be saved as PSD's I believe.