You can import images and trace them with EQ (Electric Quilt) to turn them into blocks, but I'm not sure you can get where you want to go with EQ all by itself.
I just got a book called "Quilted Photography" by Tammie Bowser. I thought it would show me how to turn a photo into a grid in Paint Shop Pro or Photoshop (which I am certain is possible) but instead, she writes at the very end of her book that she's developed a piece of software called Quilted Photo Express. You can see it here:
http://www.softexpressions.com/softw...PhotXpress.php
To use a photo editor, I think you'd need to pixelate the photo, greyscale it and then decrease the color depth to 16 or 32 colors. (Tammie Bowser suggests 24, but Paint Shop Pro gives you 16 colors or 32 colors as options.) Each of those 16 or 32 colors would represent a particular value from light to dark and would get assigned a number, 1-16 or 1-32.
Then, you'd have to scan your fabrics and greyscale each of those to assign them a number on the value scale.
The grid becomes a chart like you would use for counted cross stitch. You could enlarge one copy of the grid and substitute numbers for the grey blotches to make it easier to translate to fabric.
Your fabric is cut in small squares and is applied to gridded fusible web, like you're doing a watercolor quilt. After fusing, you'd sew all the vertical seams, clip the creases in back, then sew all the horizontal seams.
I bought a bolt of the gridded fusible a few years ago... I have made neither a photo quilt nor a watercolor quilt. So much for good intentions, hm? ;)