placing an eps file from photoshop into illustrator

I would like to import a gif file into Illustrator but when I do, I loose the transparency. The part that should be transparent is white. Therefore, I would like to create an eps file and place the image in Illustrator in order to achieve the same result.

This is what I am doing.

In Photoshop CS, I created a path around the desired area and saved it as an eps file with "encoding in 1185.

I then placed it in Illustrator CS. What appears is the black and white speckled image.

In the layers palette, it appears as a linked file.

I can't seem to figure out what I am doing wrong. What should I do to achieve the desired results.

TIA TOm